Contractor Cuts
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Contractor Cuts
Estimating for Profit: Pricing Projects the Right Way
Clark and James tackle the challenges of estimating for profit in the contracting business, exploring strategies to price jobs appropriately while competing with lowballers and maintaining healthy margins.
• Detailed estimates showcase expertise and help filter out price-focused clients
• The "cream rises" philosophy: focus on attracting clients who value quality over price
• Communicate transparently about potential issues competitors might not mention
• Three-phase estimation: desk estimate, site estimate, and final quote
• Present yourself as a guide on the renovation journey rather than a product seller
• Consistent follow-up (Tuesdays and Fridays) dramatically improves client conversion
• When handling changes, present options that might offset costs elsewhere
• Let the calendar be "the bad guy" instead of appearing desperate for work
• Be upfront about changes between estimate stages to build trust
• The better contractors collectively become, the better for the whole industry
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Welcome to Contractor Cuts, where we cover the good, the bad and the ugly of growing a successful contracting company.
Speaker 2:Hi, welcome to Contractor Cuts. My name is Clark Turner, I'm James McConnell. Thanks for joining us again this week. So today we are talking about estimating for profit. How do you build your estimates? How do we make profit? How do you price out a job? And the main thing that we're covering, or that we're trying to solve, is where, on the scale, do you put your pricing from? I'm losing a lot of jobs because I'm pricing to the profit I want to make versus I'm working for too cheap, versus I'm submitting bids knowing I'm going to change order the crap out of this person, right? And that's who I'm competing with. And so we're going to talk about pricing, how to price estimates, how to handle it, and then we're going to walk through every single stage in a job that pricing comes up and how we deal with it differently. So we'll we'll kind of go through that.
Speaker 2:So, starting off, though, james, I'm going to ask you, cause you do a ton of pricing. You, you are like the estimator of all estimators. In my opinion, you're really good at building estimates and being being like Mr Estimator. We'll get you a hat. Stop it. When you're building an estimate, I mean, I know you don't think through competition and what they're bidding. You are bidding for you, right. You are bidding for what we can do it for. But what is? How do you combat the guys that are low-balling change orders? How do you combat the bids that just come in lower than you and they're just one-man show that isn't making profit. He's just getting paid for his time and that's it. How do you build your estimate to combat that? And then also, how do you deal with the customer to combat it as well.
Speaker 1:Okay, it's a lot of questions, no, but I understand and I think I can answer this the and again. This might be a little controversial and I think there's times maybe in the life cycle of a company or a season where you're like we're gonna, we're gonna shift a little bit, we're going to make a little bit of an adjustment here because we're not landing enough bids. I'mids I'm a little bit concerned about the pipeline, but ultimately the way I feel about that is the cream rises and you want a certain type of client, Even if people that are reasonable can understand when you explain to them why your price is where it is. When somebody gets my estimate and somebody receives a desk estimate from me, eight times out of ten there's a comment about how detailed it is and how much time looks like it's been spent in there, and part of that is we've got stuff prebuilt in the software, not only line items, but now with like copying an estimate and then adjusting it from there. So there's like an an incredible amount of detail in the estimate.
Speaker 2:Yeah, and what. What James is saying is just to double down on the, on the software, what you're talking about. You can duplicate an estimate, you can. We have job templates where James has built out like some really detailed job templates that, hey, this is kind of our kitchen renovation, this is our basement renovation, this is our addition template that you can use. But the cool part that that we also have is when you're starting a new project, you can copy any job you've ever done. So if I, if I'm doing an addition, it's like, oh, this is just, like you know, state street that we did three months ago, three years ago, you can say, hey, I want to copy state street and that's going to be my template that I'm going to use. So that allows you to instantly, on a $200,000 addition, have a fully detailed scope that you're starting with and all you got to do is edit it. Yeah, right, so 20 seconds?
Speaker 1:Yep, 20 seconds. I've already got something built out that I need to tweak now, yep, and you can spend an hour tweaking that, or two hours for a $200,000 job, like if you've got the space and the time, and that that's where some of this comes down is how much time do you have to do something?
Speaker 2:And and there's an art to it too, cause it's like you're you're reading the client and how committed they were.
Speaker 1:Are they ready to go? Did they come to you with drawings? Yeah, if they came to you with drawings, taking time, take some time because they are ready to go. They're showing you that they are, they're active. When somebody doesn't have drawings and they are kind of we're thinking about doing this, we're thinking about doing that, that's a slower approach and you can kind of hold their hand through that and it's going to take a lot more time to materialize. But if somebody comes to you with with stuff they've already spent five, six, $7,000 on, they're moving On the other end of that.
Speaker 2:All the other contractors you're bidding against are doing the same. So they're all licking their chops when they see drawings and so you've got to be on top of it. But the good news is the other people that are like, I don't know, I'm doing an addition off the side of my house, why, well, my parents are going to move in and four to five years, and we're trying to get more space for them. Well, what are you looking to do, I don't know? Just more space, right, and so that when, when you're taking your time, most contractors are like not calling those people back. Yeah, so you, you have a little more leeway on that job to kind of talk numbers and kind of throw some stuff out. But really, that job consistency lands it where the other one where you're getting drawings like here are our blueprints, this is what we think we're doing. Can you put a price on it? You got to be quick, you got to take the time, but they're serious because someone's getting this job in the next two weeks, someone they're going to sign with soon.
Speaker 1:Sorry, go ahead. So you've got people that they might tell you that they're. A lot of other facets are important to them, but I am not. I am not worried about going after people that are really looking for the best price, because I'm going to price things out so that we can get the job done, the guys that work for us are getting paid well and that we're making the profit that we need to make. Uh, when I build out an estimate and it has all this detail and the client wants, uh, you know they already tell me that they're working there. They've got other bids coming in I always make it a point to number one.
Speaker 1:I'm not going to just send them that estimate, I'm going to review it with them because I want to talk through the notes that I've already put in there. And again, very, very often and this isn't just smoke very, very often when I'm talking through this job with a client, there's things that nobody else has talked through with them. Because of that, they don't want to. They don't want their price to jump. So I was talking with a guy the other day and this is a job we're not going to land right now. It might be down the road, but he wanted to do essentially two additions and nobody had spoken with him about permits. Nobody had spoken with him about permits. Nobody had spoken with him about foundation. Nobody had spoken with him about foundation footers. Nobody had spoke with him about LVLs. It was just cosmetic builds that he was getting bids for essentially. So we talked through all of those things and you know my bid was probably 60,000 over the next closest person. Yeah, that's a big chunk.
Speaker 1:No, you're not going to convince somebody to spend another 60,000 with you A full car that they're going to give you, Right, If somebody else is going to do it for them for 60 less, it is my job at that point to be like totally get it. Here's what I would look for, because I don't see a way to get this done for the price that they're talking about. Are are we getting? Are we are we? Are you looking at this? Apples to apples. Look at the framing. Look at the MEPs. What are they talking about? Have they detailed out? Okay, yeah, You're going to do a new kitchen and things are going to kind of stay where they're where they're at.
Speaker 1:But even though we're just moving the sink over a little bit, this is a concrete slab. We need to cut into the concrete slab. So, right away, we need to. We need to talk with an engineer. So, even if you're not doing the additions just by the nature of cutting into your slab, we need to at least talk with an engineer and make sure that there's nothing else that we need to consider in this spot.
Speaker 1:And that's a $5,000 bill right there. There's all of those. And then pre-construction, the permitting process. Do we have to talk with an arborist? Do we have to talk with an arborist? Because the same guy. He had a pool with a pump and then a heritage tree in his backyard. That was a concern. That's another potentially $3,000, $4,000 bill. So already I'm close to $10,000 over the next guy because I'm anticipating potentially these things coming up. Now I can either put those in the scope or I can just put the notes in the scope and say I haven't accounted for this, but this is a possibility. I haven't accounted for this, but this is a possibility and maybe that's the route to go.
Speaker 1:Me personally, I like to put it all in there and when I'm talking with them, explain we might not need the arborist. I want to at least have the arborist come out there. It's going to cost $300 to have them give us an opinion and then, if there's anything else that they need to address, it's going to go up from there. We're going to bring the engineer out. It's going to be $2,000 minimum to have them come out and give us some sort of whatever and, depending on what they say, it's going to go up from there.
Speaker 1:If I don't put those prices in, I at least need to talk with them about it. That's just me. I don't. I don't want to compete against the people that are not going to give the clients a heads up and just kind of lock them into a position where now they've spent however much in due diligence, maybe they've given a down payment to somebody, and then they're kind of in a pot committed situation. Yeah, I don't like working under those parameters. So I get the frustration of the more accurate I am, the less bids I'm landing. Yeah, the way I think about it is the more accurate I am, the less bids I'm landing. But the cleaner clients that I'm working with, yeah, and that experience, when you don't have a lot of bad clients clogging up your pipeline, the pipeline moves a lot smoother.
Speaker 2:It just does, yeah, well. And some of this starts with having a good reputation and clients coming through the door and having good marketing. And that's what side of it, because you can't be picky. If you got one bid, yeah right, and so that I think that's where some guys run and like, well, that's good for you, that you can do that. It's a it, it's, it's more than just one thing. This is an entire company that we have to have from a good reputation because we're treating people well and we're doing things right and we're closing out the job well. So then people are telling their neighbors so their neighbors saw the work that we did and want to use us. And right, there's, there's it's a waterfall of of things happening that that affect each other. Yeah, so it's, that's some of it of. It's great that you can pick and choose and bid high and lose 20%, like you could if I was coaching James on trying to sell more jobs. You can dumb down some of your estimates and come in at a lower price and hit them with change orders. That's not how we do things and that's good. That's a choice that we make in terms of like. We'd rather make it perfect, have the detail and impress them and work with someone who gets it, than be the lowest bid, because if we're the lowest bid, we're going to get the lowest people that just care about price and don't care about quality, and they want us to cut corners until the end and then they want us to go back and fix all the stuff that the corners were cut on for free. And so it's a. If you're living at the bottom trying to chase the lowest common denominator or the lowest bid, you're going to stay there because you're going to deal with those people and you're going to get a bad reputation. It's like it's it waterfalls the other way, right, right, and so I think it's.
Speaker 2:The hard part is to lose bids. Right, like we had. We had a, a, a job that that we all worked on together. That was a $2.4 million new construction home, and we lost it because the other people came in and, like our competition, they went with a guy that bid like 2 million and it's like, yeah, we could bid it at 2 million, like this is just conceptual right now, like we could be at 2 million if you want us to be, but we bid it at 2.4 because it's like we viewed it when you built that estimate, you viewed it like if this was my house. I do built that estimate. You viewed it like if this was my house, I'd do it this way and I want it this way and I want it nice, and this is your retirement home and this is, and so the the reason that we lost that job is the exact same reason that we win a lot of other jobs, because you took the time, the effort to view it as your personal house, not to check a box, to send an estimate out, cause it's gotta be out today, but to take the time, build it out right and then we walk them through it on a call and talk through this and this and this is how we're going to do this. And so I'd rather lose that job than land that job and then have to change order the crap out of him up to 2.4, because that's what we know that he really wanted. Yeah, right. And so I think that's the mindset that we're looking for in the desk estimate phase and what you're doing there.
Speaker 2:I think the other side of this is what you mentioned earlier and what we kind of assume, but most guys don't do, is what are we selling that customer.
Speaker 2:If you're selling the customer the lowest price, build your estimate, whether it's a $10,000 job or $2 million job. If you're just selling on price, build the estimate, send it by email over to them and let them see the price. If we're selling on our knowledge, who we are, our education, our ability to view their home like us, don't send them the estimate via email. Set up a Zoom and let me show my value and my thought and how much I care about this project and why I'm thinking and why I price it this way on a Zoom call, like we do. And so you get them on the call. You walk them through the estimate and the footnote during that call. About 45 minutes in, as we get to the bottom of the estimate, they can see their total. But that's not what we're leading with, because that's not what we want them to buy. We want them to buy our thought, our ability to identify that an arborist might be needed.
Speaker 1:We want them to the knowledge that we have in the industry is why they want to spend more with us and the first question you ask somebody when you're talking with them about their project is what is the goal? Like, you ask somebody when you're talking with them about their project is what is the goal? Like, what is the? What is the end goal? Like you were talking about early might've been on the previous podcast, but, um, you're trying to, you're doing an addition, why? Well, mom's moving in and yada, yada, yada. Well, what's, what do we? What do you need? Is there ADA requirements here? Like I don't know? Okay, so let's talk about that. Like, do we need to consider that? What? How long are you going to live in the house? Or is there? Do we need to consider? How much do we need to consider resale right now? Is that a? Is that?
Speaker 2:an imperative Access points. Do we need to put an elevator in if your parents, all of the stuff that people don't think about, they just? I bid the blueprints you sent me. Yeah Well, the blueprints are wrong.
Speaker 1:If you ask, if you ask what the goal is, and, as you're building the scope out, there's a lot of notes that you can put in there because you have all the experience. You're like well, have you considered this? Have you considered this? Have? Have you? Have you thought through what you're going to do for storage? Have you thought through parking, like all of these things that don't show up on the architectural blueprints because the client didn't know to talk to the architect about that.
Speaker 1:The client, in the blueprints themselves, might have all this prebuilt stuff that the architect just puts in there. That's like have you read through this? Do you know that they're? They're wanting to same with the, the $2.4 million job yeah, there was. That was value engineered on the upside for energy efficiency and green building. Yeah, so all of the material they were calling out was like top dollar material, and that was one of the and he didn't know the response. They were calling out was like top dollar material. Yeah, and that was one of the. And he didn't know the response. He didn't know that number one, that those things were included, and he didn't know what he actually wanted. Yeah, and so there was a lot of there's a lot of stuff like that that you need to be able to walk clients through. But the there's. We talk about doing the three different phases your desk estimate, site estimate, site estimate and then the final one, and we've tried to start coining this as the quote.
Speaker 2:So all of these are estimates. Converts it from an estimate to a quote.
Speaker 1:So once we go, the desk estimate, site estimate and then the quote, and so a lot of people will ask you okay, well, what is your? What's the percentage change from your desk estimate to your quote or your site estimate to your quote? And my response is always the same I can't give you that number because from the desk estimate to the quote, there are so many changes that you're going to make that affect this, this price, that it's not a change that I'm necessarily making. It's. We are going through a process now of figuring out. You have a concept. I know how to build whatever you want. Now we have to figure out what that budget is.
Speaker 1:Yeah, that's, that's the game here. We need to figure out what you actually want, because I can build you what you're asking for for 2 million. I can probably build it for 1.8 million, but the fact of the matter is you have a thousand decisions to make between here and then, and all of those are going to affect the price. So I can't give you a percentage. But what I can tell you is, if you want to go ahead and spend $2,000 to $5,000 in due diligence right now, we'll forget all of the other stuff. We're just going to get all the crews out there and start walking and see where we end up to other people. I can give you my best numbers, but until I get to that final quote price I'm not going to be. I don't feel right about telling you hey, this is where we're going to be, because I don't know, I can't read your mind.
Speaker 2:Yeah, if I price for a three tab shingle and you say hey, I want slate roofing, okay.
Speaker 2:That's three times as much, okay, so yeah, it depends on you and how clear you are at this point. I think something else that you know if if you came on last last retreat in January and or if you're coming on this this coming retreat in January one thing that I loved that we did was you did a live desk estimate with somebody. We walked them through it and it took 45 minutes an hour and you walk through and we all watched, we put up on the TV and watched it happen and I think a lot of guys got a lot out of that, because there is really an art to presenting, to talking and to asking those questions. And I think one thing that you do well is you put detail in your estimates. But more importantly than having everything detailed out is I want five to 10 good questions on that call. I don't want, I don't need you to think to price out and spend three hours pricing out ADA upgrades and an elevator shaft to get them to the second floor. Just ask that question and just know, hey, that's going to increase this and that's going to increase that, and just know, hey, that's going to increase this and that's going to increase that.
Speaker 2:I don't need to spend the time building that because they didn't request it, but they kind of made hints that their in questions, zeroing in with them on what they're looking for and by end of the call I have a full concept and the numbers I have here about what we talked about. Or, hey, I got to revise this because you want this, you want that, you went to slate roofing, you went to that. Like, all of that stuff is going to change this price. This is just a call for me to pull more information out of your brain and really start asking those questions that are also making you question my competition. Right, they're thinking, oh man, no one's asked me that. Oh man, I didn't even think about that. Oh, I don't, I don't know if that's on the other guy's quote, yeah, right. And so then they go ask other guys and say, hey, did you quote for ADA?
Speaker 1:And the guy's like, oh, that guy doesn't understand. Not only did I quote for 88.
Speaker 2:I quoted for 90a. Yeah, I mean, but literally there's contractors that are like that, that don't understand that and that's okay. That's that should build, uh, in your client's brain like, oh, this is why I should go with this guy, this is why these guys are the guys I should choose, because they've thought through this, they know this, they've dealt with this before, and so it's not we're talking them into spending 60 grand more with us. It's we're trying to show them they're going to spend that 60 grand with somebody We've thought about it ahead of time. That guy's going to change order. You, yeah, or I can get that 60 down, but you've got to sacrifice on what you're looking for because that's what that guy's bidding to.
Speaker 2:So I think the desk estimate is the most difficult part of guys coming in to grasp and understand what they should be doing differently, because like, yeah, oh, I do that. I kind of screen my, I vet my clients, make sure they're not tire kickers, and then I'd shoot them an estimate and then we go from there and it's like that's on what we're doing, this isn't. It does vet them going through this process, but I'm not presenting them with numbers. I'm presenting them with an experience of how they're gonna be treated, how they get my brain thinking through their project, how they get from us a full experience. Oh, and there's also a price on the bottom of this. But let's talk through what I've thought through on already on your project.
Speaker 2:Yeah Right, so I think that's the desk estimate phase. That's competing. I'm not competing with numbers, I'm competing for knowledge. I'm competing for attention, and if someone values that, they're going to be a great client for us and we're going to grow this company. If they don't value that and they're like well, you're more expensive, okay, and if I can't?
Speaker 1:if I go from the desk estimate and I can't get on site because my price is too high, yeah, okay, like that's. That's the really lackluster, not sexy answer to your initial question is, for me, if I do a desk estimate and I feel pretty confident about how I'm putting these together and I can't get on site because my price is too high, I will plant that seed of doubt for the other guys. But it's not like well, I'm gonna. Well, you gotta make sure those guys are gonna screw you. It's like that's not, it, it's I'm going to make those guys better by giving my client some ammo and maybe they don't go with me. Maybe they go with that guy, maybe they show my estimate to that guy and say bid me this exact thing and he comes $10,000 under. I never get the opportunity. Okay, that'll, that might happen, I don't know. But at the end of the day, if I can't get on site because my price is too high from the jump and that client's just looking for best price, I'm going to be, I'm going to be battling that person from the very front to the very backend and I'll do, I will, I will do it, I will do it.
Speaker 1:But most of the time those people, uh, they remove themselves from the equation. It's a lot less headache and we can, and we can put all of our efforts and energy to making the clients happy. That are the ones that we want, yeah, and not the ones that we're having to babysit the whole time and say remember this, remember that you have to get me the selections. Yeah, we're invoicing. Where's the money? I invoiced you a week ago. You haven't paid me. We talked about this. If me, we talked about this. If you want to do that, let's do a draw system. I don't. There's too much going on. There's too many variables already in our industry to add on the headache of a client that doesn't give a shit about how you do your thing. Yeah, it's like I'm I.
Speaker 1:It's a very frustrating aspect of the of the job when somebody says to you well, that just seems really high for demo. It's like based on what? Based on what experience are you? You have to have a Bobcat come out. We have to have a guy that knows what he's doing so he's not tearing up your plumbing or your gas line or breaking your foundation. He's got to dig this out. Then we have to prep the slab space, then we have to tie all the metal together and make sure that the guy is reading the engineer notes. Well, this other guy bid $1,500 for the demo. That's great. Who's doing it? His 15-year-old cousin.
Speaker 1:Three dudes from outside Home Depot, that's what's going to happen and then something happens and change orders arise from those types of situations. Change orders arise from those types of situations, yeah, like if the person that's giving you that other bid doesn't even have in their foundation or grading line that if we hit rock which we were going to probably hit something, then there's going to be change orders. That's a problem. Like you know that when you dig in the ground, very seldom is it perfect situations. Yeah, and depending on where you are geographically like Kentucky, ton of rock, nashville, ton of rock like there's gonna be issues there. So you should tell people about that. Where are you gonna be where you feel really confident that you're not gonna hit any underground issues?
Speaker 2:Or we dug out a basement and it rained every day for three months and so it kept filling up like a pool and like like that's all costs money to pump that out and to reframe, like there's so much, there's so many variables that they need to understand. But most guys aren't, given I would say also say I don't. I don't sow seeds of doubt in in the competition. I'm not going to talk crap about these guys and like, oh, I'll go. I'm not trying to scare the person, but my go-to line every time when the person mentions price in somebody else, my go-to line is hey, listen, I'm going to be three to five percent higher than the average guy because of our quality, because of the amount of communication we do, because of how we run our project so well, and I'm not willing to just pick guys up off the street to do my work, but I hire professionals with us. I get it if we're three to 5% over somebody, if I'm 10 to 20% over.
Speaker 2:This isn't apples to apples. They're not bidding stuff that I've caught, and so let's sit down and have a more thorough diving into the numbers of what you're looking to get done. And if I bid something, if I bid demo for 9,000 and they bid it for 1,500, there's something off. Either I overbid, because I didn't understand what you wanted, or they are way under bidding that and you're going to end up paying maybe eight, like you will pay more, but eight over nine, right?
Speaker 2:And so I'm thinking through this stuff and and, like you said, like if they find value in my thought process and protecting them, they're going to want to go with us, right? And so I think that's kind of the seeds that I'm talking about, sowing of doubt, of like that's not accurate, like, like this doesn't make sense, like I understand if I bid it at 85,000 and they're at 79. Yeah, we're, we're, we're higher value than than them and that's okay. That's. That's the difference of a steak at a really nice steak house and a steak at Chili's. Like they're going to be different prices for different qualities for the same for steak, right. And so trying to help them understand that side of it, as opposed to being like, well, that guy's just going to screw you, right.
Speaker 1:And that's exactly what I mean is not just, it's not this you don't know who you're bidding against. So letting them know, hey, be on the lookout for these things, I'm saying that makes the guy you're bidding against, makes them better, because maybe the client takes your scope and shows them and they have to. Okay, yeah, here here, here, at the end of the day, if you, if all of the people in our world, the better we all get collectively about showing up the way we say we're going to show up, the better it is for everybody. Because it's no secret that when you go into a job, you go into a bid, you already have a ding against you because of you're a GC, you're a contractor. These guys don't answer, they change order. You, they do this, they do that. The better we can all get, the easier that transition is for everybody. The better we can all get, the easier that transition is for everybody.
Speaker 2:Rising tides raise all ships, type of thing. Yeah, I also one other note that we haven't said part of this process on the front end and we're going to talk about a couple more things, but on this desk estimate that we're talking about, one of the things that a lot of people miss is it's even if you do that first call well, I had a call, I did this. It is all about the follow-up. How quickly, how on top? How do I manage it? Most guys send out the bid, talk through it. Hey, let me know if you need anything. Three weeks later, hey, uh, I need work now. Hey, can you? Uh, where do you, where are you at with my bid? Like, are we ready to move forward? It's like, no, no, they've. They're dating someone else while you're out of state. Like, you're, you're out of their, their brain and they're gone. And they've had four conversations with this other contractor because he's on top of his communication with them.
Speaker 2:A simple email, a simple phone call. Hey, just checking in on this, wanted to see. I mean, and all we're doing is laying out our next steps, every single contact point is laying out, trying to make them take one step. I'm not trying to get a signature today. I'm trying to get you for a side estimate, I'm trying to get you to do a zoom so we can talk through this. I'm trying to get you to sit down and let's talk through some finishes that you're looking for, because that's the last thing we need to finalize this from an estimate quote, right, and so all we're doing is trying to take them on the next date, not marry them, and that's where guys miss it because they're so busy and I'm on the job site and I'm doing like if you had twice a week. Tuesdays and Fridays is where I always try to push guys. I sit down and I email every single job on Tuesdays and Fridays, whether it's an open estimate, all the way through a invoices around. I final payment. Guys, if you can just do that, twice a week Tuesdays and Fridays you sit down and email those and have those conversations on every single job. The person that you send a bid out is going to hear from you Tuesday and then Friday and then again next week, and they got three communications in eight to nine days from you, where every other contractor out there is just waiting for them to get back to them, right, and so if we can increase that side of the customer service, of planning the seat in their head of oh man, james is on top of this. James, I mean this guy would be great to work with because he's communicating a lot with me and that's what I need.
Speaker 2:Once I start the project, every action is really telling the story of what their experience is going to be like when they say yes to you. So we're trying to get those actions as well. So it's kind of lining all this stuff up. It's trying to do all of this stuff well and all of this takes space. All of this takes some time and that's okay. Take the time to do that.
Speaker 2:And I know you're out running jobs. I know you're out on job sites. Sometimes some of you guys are probably swinging hammers on job sites. It doesn't hurt to say hey, client, just so you know. I know I'm doing the work here Tuesdays. I don't get here till 11. And so because I got to do office work and I got to organize myself and clients like, oh great, I need you organized, that's perfect. And I say that before I start the job. And every Tuesday I show up at 11 because I spent three hours in the morning, four hours in the morning, following up, sending estimates, you know, touching base with all my clients, ordering materials, making sure that everything's going well. So it's, it's not. We're not looking for you to spend 40 hours a week in the in the office. Give me three to four hours on Tuesday, two hours on Friday and that's it. That's going to solve a lot of this and sell more jobs for you.
Speaker 1:I think some guys are worried about seeming like thirsty and like too needy to follow up, and so one thing that I always do is whether it's the desk estimate or the site estimate, wherever we're at in the process, and they need some time and they need to look it over, they want to redline it or whatever. I say, not a problem, I typically follow up on Tuesdays or Fridays or whatever it is. I typically follow up once a week. Is that a good? Would that be good for you, or do you need extra time, like some people? Like it's summer, we're going on vacation, we're doing this, kids have baseball, girls have softball or volleyball, whatever it is. They've got travel sports and they don't want to think about it. They just want to have that and just stew on it. Can?
Speaker 2:we talk November 1st.
Speaker 1:Not a problem, on my calendar, I sent you an invite so that when they and if they don't accept it, hey, can you accept that invite. I just want to make sure that we have a spot to touch base. Yep, you can follow up then. It's not thirsty, it's professional. You need to follow up with them, make it your responsibility and ask them is it all right with you if I follow up in two weeks? Is it all right if I follow up with you every week?
Speaker 2:We're out of town for the summer. August 1st I'm going to sit down and start looking kind of thinking through this. Once the kids get back in school, you do the invite on the calendar, like James said, you set it up and then you go to their job in the software and you put it on hold and what that does it takes it off your screen. You pick a date when you put it on hold as to when I want to deal with this again and you're setting up a task for that day. So the end of July, cause we're we've already got on our calendar for August 1st. It pops back on my screen. I get a task that pops up and I just say, hey, just excited to talk with you on the 1st, three days beforehand. I'm going to send that follow-up email. I'm going to re-engage, I'm going to look over that estimate that popped up on my screen. I'm going to handle it.
Speaker 1:I had someone pop on my task list today. I forgot who they were. I I don't remember their name, but they're on my task list for today to follow up with them about an estimate. I don't remember what it was, but it's on there.
Speaker 2:Hi, hello, I'm James and you needed an estimate, I think, along with those follow-ups and setting it and not looking desperate. The other thing that I always lean on is let the calendar be the bad guy, not your desperation for needing work, right. And so it's always like, hey, our calendar is filling up and I want to make sure that I reserve a spot for you, because we've talked about you wanting to get started in a few weeks and I wanted to make sure that there was space for that. But I also want to let you know we've got some other commitments that are coming up. So should we put you down to start around then, or do you need more time to think about it? We'll push it off, right, and so I'm not desperate, I'm just trying to protect you. So we're ready for you, yeah, and if you go with that angle, every single, I mean I don't care if I have no jobs on the calendar, like hey, starting to fill up for next month, can. So why don't we go ahead and have a call next week to finalize a figure out if this is going to be? And so the calendar is the bad guy and you're you're the good guy, protecting them from something bad happening from them losing that spot Right, and so I don't reserve your spot on the calendar until I get a signature on the estimate. But I'm going to pencil you in because I know that you really need this done and you got family coming in for Thanksgiving, so it's got to be done by then and that those sort of conversations to where it's not a desperation, it's I'm looking out for you type conversation All right, now that we're past the desk estimate, we've got that.
Speaker 2:They like it. You've gone on site On a average hundred thousand dollar job, eighty thousand dollar job, whatever it is somewhere in there. You go on site, you print out your desk estimate, not you. You're sending it to your project managers. But if it was you, we walk on site with the printed out desk estimate that we've already kind of discussed and gone over with them. We're not going to go over how to do a site estimate on this podcast, but you go through everything. You deal with the customer on site. How much time are you spending to revise it at that point? Cause we're not at the revisions to convert it into a quote with the signature, where we're doing the due diligence and picking out finishes. But what are you, what are you editing at that time and how are we looking at pricing for trying to make sure that our pricing's there and we're editing that where. Where do you adjust pricing at that point and what are you doing like with the customer to let them know and have those conversations?
Speaker 1:Well, the biggest thing is on the desk estimate. Most times you don't have accurate linear footages or square footages. Like this might be too much. I think I have the luxury of being able to spend more time on these desk estimates than most people, but I'm going like if it's an addition, no, that's a bad one. If it's a renovation, new kitchen, new kitchen and it's going to bleed into the living room. So it's kind of a little messy.
Speaker 1:I'm using windows. I'm using windows, I'm using cabinets, I'm using doors where I know general sizes to determine what is the linear foot of this wall, cause it's an interior wall. If it's an exterior wall, I'm getting on Google earth and I'm measuring the You're saying before the site estimate, before the site estimate, I've got Google earth pulled up. Depending on what it is. If it's something where again, $100,000 job, I'm going to spend 10 minutes on Google Earth measuring because I'm not on site to get a realistic understanding of what that looks like. It's a lot harder to find on the municipality website. If they do have a layout in there, it almost never has anything that's like actionable. So, getting on Google earth and being able to find here's the linear footage of this exterior wall or using just your general understanding of that's a 36 inch exterior door. So that means this is probably another three, six, nine. This is a 12 foot wall. Knowing that can help you kind of narrow down. What is the square footage of flooring needed for here and what is the square footage of sheetrock needed? And once we do that we're going to affect the ceiling. It's going to be a new light plan, so the whole kitchen really needs to have the sheetrock pulled out. So I'm just putting rough numbers on my desk estimate.
Speaker 1:When we get to a site estimate the project manager yourself, whoever's doing it, pulling tape, pulling tape, getting quantities and looking at the notes that we've put in Sometimes you don't even know. The client can't even tell you if they're on a slab or a crawl space somehow, and that affects your pricing pretty considerably, especially if you're moving utilities. So the things that are, there are certain things that you cannot do on a desk estimate. Those things need to be executed on a site estimate. Do not wait until you're in due diligence to land the plane on things that can be landed on the site estimate.
Speaker 1:So quantities, linear footages, square footages you know what's in the attic, what's in the panel? Do we need larger panel what's? Are there HVAC requirements that are going to increase because of what we're doing? What's the size of the current units? Because your client's never really going to know and you can send those to your HVAC tech like the big ticket items that you can probably get a pretty good idea of. Hey, we're doing a 400 square foot addition on this house. It's going to be a nine foot ceiling. Hey, hvac, we already have two units on site. It's a 3,500 square foot house. It's going to become a 3,900 square foot house.
Speaker 2:Take a picture of just the little tag on the HVAC unit that has the model and the skew and like the age.
Speaker 1:What are we going to need? Yeah, what are we going to need is would a mini split work? What's the price difference between a mini split in this? It'll take you five minutes to send your HVAC guy an email that essentially is like your client reaching out to you for a desk estimate. Hey man, what rough. I'm not holding you to it. You need to come on site at some point if we get close. But give me that number. Talk to your flooring guy.
Speaker 1:We got a tile that needs to come up, but the whole project deserves a lot of flooring. Can you give me a good deal on demoing all this tile and installing new flooring? You can have some of those conversations before you get to due diligence. You don't have to be penny pinching your time if it's going to be a five minute expense where you're actually getting very actionable, good information. So the desk estimate to the site estimate. I think that's one of my frustrations with the, when project managers aren't looking at the work that's been put in on the desk estimate. Hey, we need to answer these questions. This isn't just to get a good. You get on site and you just get a good feeling.
Speaker 2:Which, on our desk estimates, we'll have questions in the description of the line item that we want the project manager to look at. Or if you're doing it yourself, you're going out and that, oh, I got to ask about this Because all of the stuff you just ran through is so difficult. It's especially for the newer guys to think about. Like oh, I didn't even ask about the HVAC, oh, I didn't even think about that, right? Oh, they sent me a picture of the kitchen but I didn line of cabinets behind where they took the picture. So we just added 14 new cabinets to the quote. That I need to capture and talk with the homeowner. Like, hey, if you look on the quote, I did 20 cabinets. I didn't realize you had 14 over there, so we're going to need about 34. It's going to double your cabinet expense, right?
Speaker 1:And if you don't tell, them that and then you do the revision and you send it and they're like your cabinets jumped up a lot Bait and switch. Well, I didn't see the ones like what are you talking about? You were there on site, like, yeah, I was there on site, but the desk estimate I did. You can't get into that because it's just, it's, it's it. You only sound petty, yeah, when you're coming at them with like well, no, no, because remember if the desk, you remember at the desk no, no, you owe me that money Cause I thought of reason to tell you that you owe me the money.
Speaker 2:Yeah Right, that's how it feels to them.
Speaker 1:And so you do need to make sure that when there's differences in the in the desk estimate to the site estimate, that that's a conversation, that that is, that is, uh, not just a sticker shock when they get the revisions, but that as you're walking through the scope, it's like this is different than kind of what we talked about on the desk estimate. Here's why and maybe that loses you the job, but again I'd rather lose it than deal with that. That's okay. You are going to lose jobs and you are going to quote, unquote, waste time, but I've said it a hundred times, you got to find areas where you can double up your efforts, so it's not a loss.
Speaker 1:Every time you go out to a site estimate, every time that you're interacting with a client, there's things that you're learning, there's things that you can put in your tool belt, add to your arsenal, and maybe things that you're like we might need to change our approach a little bit on jobs like this, because we keep running into this same issue over and over, where a site estimate really just doesn't even make sense right now because they don't have a full understanding of what they even want to do with the renovation, what they even want to do with with the renovation. So maybe the conversation is more if you are you going to do this project, regard like you're going to do something, like, yes, great, let's work with an architect and an engineer, because you're not committing to me, I will, I will run this as part of due diligence. We'll break all this out. We'll get you a really good bid. We'll work with the architect, we'll work with the engineer, but I can't give you a legitimate bid until I know what we're doing precisely.
Speaker 1:Yeah, because you think the client thinks that it's just well. It can't change much. Based on what they just told me from the desk estimate, that's not true. Yeah, if you want to do an, if you want to do an addition and there's I mean going back to an easy one the foundation is sitting on top of a heritage tree or a boulder. We either need to change the plan and move the foundation over, or we need to bust that concrete up, or we need to talk with the arborist about making changes here, and so on a hundred thousand dollar job, you jump to 115, 120, that's a 15 to 20% increase on your budget just because of one very innocuous thing that turns into a pretty significant change.
Speaker 1:Yeah.
Speaker 2:Well, I think it's. It's a couple of things. When we're talking about making sure we keep our profit, is it's okay to have those change orders or the changes in the estimate? We aren't to change orders yet. We haven't started. You need to discuss it with the client on site. We need to talk through it before I leave the desk estimate.
Speaker 2:If I leave the desk estimate and I go back and I'm sitting there working on building out this estimate, I'm sorry. If I leave the site estimate and I go back and I'm sitting there working on building out this estimate, I'm sorry. If I leave the site estimate and I go back and I sit at my computer, I'm going to revise what I had already written and I realize all the cabinets are doubling. I'm not going to send it to them hoping they don't notice. I'm going to call them before they get my estimate and say, hey, I'm sitting here working on revising assessment right now. I originally put 20 cabinets in here but when I got to the site I counted we're at 34 cabinets we need.
Speaker 2:I think I missed this from the photos. The photos I'm looking at that you sent me was only from one angle, so I just wanted to you know, are we doing that whole wall behind you? Do you still want to do that? And so I'm asking them questions like I don't want them to be, to be a part of me realizing that the price is doubling for the cabinets.
Speaker 1:Yeah, and then they also they don't know what you know. So, okay, that bank of cabinets that wasn't in the pictures also has a bridge cabinets above with glass, and none of the other cabinets have it. And you're just like, do you, is that something? You also want the bridge cabinets? Yeah, I definitely want the bridge cabinets. Is that more of like an aesthetic thing? Are you actually going to use that storage space? I don't know Like you'll be shocked at how quickly people backtrack on what they know that they want. Yeah, when it's like, okay, bridge cabinets, that's not just like one cabinet, you have your five cabinets here and then that's five more cabinets above plus the glass inserts.
Speaker 2:So it'll come $4,000 to $5,000 extra Do you need?
Speaker 1:that in your butler pantry, where no one's seeing it, and that's the space where it's kind of like away from people that you prepare things. Yep. No, you know, actually I don't. That's not super important to me. Great, why don't instead we? You do want to go to the ceiling, though We'll add some trim, we'll save maybe 2000 bucks. Instead of spending five, we'll spend two and it'll look great. It's just not going to have the way it looks right now. Yep.
Speaker 2:Yep, you're giving them options so they can pick good, better, best, like none, trim glass, like what do you? How? How nice do you want it? And we're good with any of them. But here are your price points as opposed to why bid 28,000 for cabinets and now they want that and so now my profit's dropping because I got to do that and we didn't really talk about it. But I did bid for the cabinets. I just didn't know that.
Speaker 1:And that's. That's another thing that you really need to lean into with your project managers, because it doesn't matter I mean, however long I've been doing, for whatever reason project managers get on site with a desk estimate and if there's changes they're reluctant. They're like, yeah, I'm just concerned, man, because the price on the desk estimate like I don't see how that's going to work. It's like that's okay, that's what the site estimate is for. You're not locked in.
Speaker 1:I'm not sending you out there with a desk estimate saying come back with this price. I'm saying check me, keep molding. I don't want to be 100%. There's no way I'm 100% right.
Speaker 2:Well, I think the mindset that we try to change in, guys is most contractors coming in or most project managers coming in to work for you have this mindset of this client is purchasing a product from me and I told them how much the product is, and so we're locked in on that and so I owe them the product. I'm selling them cabinets. I'm selling them a product. I quoted them $28,000 for this. They want a little more, but I already quoted them, and so there's already been an agreement of exchange of goods here.
Speaker 2:And what we try to switch from that mindset is I am the guide on the journey of a renovation. I'm your renovation shaman and I am walking beside you, and I am here as the professional, with all the knowledge and the know-how and the connections in my crews to execute your vision with your money. And so I want to view this as I am your shaman, your guide. So here are the options. We can do no bridge cabinets. We can do the trim for 2000. We can do five.
Speaker 2:I think this will look good, but that's up to you how much you want to spend on it. And so I am not making decisions and this isn't a. I'm selling you how much you want to spend on it, and so I am not making decisions. And this isn't a I'm selling you. I'm trying to talk you in, I'm trying to exchange of goods. You this isn't a shop that I'm selling you something at. I am your guide of how we're spending your money and I'm trying to save you money as we go along. And it's a simple mindset change, but it changes everything in terms of the estimate through the final invoice as to how we're talking about things. Change orders are disappointing for me, not like hey, you owe me more money, but like oh no guess what.
Speaker 1:It's not like yippee, this is a change order. It's like, shoot, we got bad news and it's, and it's truly, truly it's. It's truly frustrating because it's like ah, we already built out the timeline, we already did this, we already talked with these guys and now we got to. It's going to throw a wrench in it, but it is what it is. They made a decision that's different. All right, you know whatever, but it's not a. You're from the desk estimate to the site estimate and everything up until you get a signature and a down payment for due diligence. You are figuring out what the product is. This isn't. They haven't given it to you. Whether they think so or not, there's a thousand questions you have to ask and get to the bottom of before you can say, okay, this is the product that we are talking about and this is the price for that product. Up until then, it's like I want a car, okay.
Speaker 2:All right, 50,000. New SUV coupe yeah, what color PT Cruiser Ragtop.
Speaker 1:What are you looking for?
Speaker 2:Ragtop PT Cruiser is exactly what I'm looking for.
Speaker 1:Dude sorry side note when I was getting rid of that, do you remember that Chevy white Malibu? Yes, when I was getting rid of that car, I brought it in and this guy was like I think I know just the car that you're looking for. It was like this. It was like the ball pit of the car they had to. Someone had to sell it. He brings out this rag top purple PT cruiser and I was like pull up another one baby.
Speaker 2:I don't like it, I don't. I don't want to one up you. But for the first year of our marriage my wife drove a PT cruiser because she worked at a real estate office and they had it wrapped and they said you can drive it for free and we needed a car. So we're like we'll take it for free.
Speaker 1:I'm not a car guy, but that is the ugliest vehicle I've ever seen.
Speaker 2:Anyways, sorry if you drive a PT Shoot there's people listening to this but they're awesome vehicles, high quality, all right. So landing the plane on this one change order is kind of the last part, where you lose money and drop the profit from the estimate, right. And so, with the mindset that we're talking about, it's okay to hit people with change orders, as long as you do it before the work gets done and in the right way, with options. Whenever I come up with a change order, whenever there's a change order that has to happen on a job, I look at the rest of the job and say, okay, where can I sacrifice money elsewhere to make up for this? So, that being said, I'm looking. I'm like, oh, I know that they've, this is going to suck. We found termites. They're going to need to spend three grand on this.
Speaker 2:I'm looking around saying, hey, they have some really high end granites that they're picking out. I'm going to go to them with some lower end selection so it could be a wash, so they don't have to spend extra money. Now, do they usually do that? No, normally people are like, just fine, pay the extra, but for them, I'm their guide to try to get them down the road. So I'm trying to think options here. Okay, where can we not hurt you financially? Where every other contractor is like cha-ching, cha-ching, cha-ching, give me that extra money For me? I'm saying, hey, no, I'm trying to save you money here. We could do that if you were okay with downgrading that. They're going to say, no, that's fine, let's keep that. I understand there's termites, that's fine, that's going to happen.
Speaker 2:So I am again the mindset of I'm your guide, I'm the leader here. I always the metaphor I've said a hundred times I'm driving a car and I want my client to sit in the passenger seat and so I'm saying, hey, we're driving to the destination. They say, hey, turn left here and say, well, actually, I know there's construction on this road, we're going to go to the next one and turn left. If I'm steering and driving, we're on the journey together, though I'm not outside the vehicle. I'm not trying to me and my crews versus them as a customer, but instead I am their representative in getting this done, and I view it that way. The conversations change, the attitudes change, the way that we treat each other changes to where they have a really good experience because I'm caring for them and I'm guiding them down that and at the same time, I'm not losing profit, because they understand it, because my verbiage is not hey, you owe me money and now we're clashing and they're not going to pay me, but instead like, oh, there's honestly, like I missed something on the estimate. I didn't realize we needed this. If we would have seen that we would have had to charge you then it would have been on there. I've got to charge for it. I'm going to do this, this and this. I'm going to cut the price down a little bit, but it's something that we need to add onto the quote. Right, those are the hard ones.
Speaker 2:It's easy to talk about termites. It's hard to say I didn't put shingles on the quote. I know we were doing an addition and I didn't put roofing anywhere for that addition. We missed it and we got. We got to add it on this, what I'm going to do.
Speaker 2:But that conversation is has to be had in the front end, not you owe me money, tough luck, you got you, you. You now have a roof, right? You want me to put no roof on that, like? Instead it's a. Hey, I missed it, you know. This is why I wanted both eyes to look through and review the quote, but we don't have a roof roofing call for anywhere. If you can find it in here, we'll cover it, but I can't just give free roofs, and that should have been on the quote, right? So having those conversations as early as possible where you're, where you're disappointed with them, um allows you to charge for the stuff that you're doing, make the profit of what you're doing, be able to stick to what the agreement was. So any other comments about other vehicles that you don't like.
Speaker 1:Um no, I mean, suzuki Samurai is a cool car, cool car, uh, what was your first vehicle you ever drove? Jeep wrangler, oh you, hey, I had to have the transmission rebuilt. That's right, didn't it get stolen? My sister left it somewhere, shady yeah, and when I needed it the most it was gone.
Speaker 2:It was gone I drove a geo storm. That's another cool car. It was not too bad. It got crushed like a soda can in a very, very minor accident. Anyways, thanks for joining us this week. If you want to talk what? Car talk? Car talk uh, that's our next one. We're going to record the. If you guys want to talk I love that hop on a on a phone call with you. If you go to ProStruck360.com and go to contact us, we can schedule a 30 minute call where me and you talk directly. Talk about your business, talk about how you can grow. Love to chat with you. If you want to talk, do that. If you want some software the ProStruck360 software go to ProStruck360.com. Some software the ProTruck360 software go to ProTruck360.com. Free trial for two weeks. It's month to month, no contracts. It's $199 or $89 depending on what level. You need Really good software. Hop on it. Thanks so much for listening. We'll talk to you next week. Bye, bye, bye, bye, bye, bye.
