NEVER Break Down A Bid For A Customer - Here's Why

Should you break down your bid for the customer when requested? What's the difference between a bid and an estimate. I'll show you exactly what works for me and why.

[Joel-McConnell]

I am a retired contractor of 30+ years, all of this was true 40 years ago too and probably always will be 40 years in the future! lol! Customers are even more demanding now though, and with such high costs for everything these days I can't blame them. But it is really not fair for them to make you break down all of your costs so they can then figure out ways to manipulate you and your business. Only you can ensure your business is successful, not a only gave bids or worked time and materials, I never once gave a price breakdown for a customer for a bided job and always had work. Never let a customer in any business dictate anything to you about running YOUR own business! Some contractors have learned to use this idea of breaking down costs to their advantage by actually breaking things down but being dishonest about the real costs of that breakdown! Skewing such in a way they believe might help them to fool the customer and land them the job! Customers then believe they are getting the "honest" guy because he was willing to break the costs down for them, but they are really getting the most dishonest How many customers have to break down their own jobs for their customers at their place of employment, not many. Do you ask Apple to break down their costs of an I-Phone before you buy one? Or how about that new car or boat? That would be silly right? It's a silly idea and one that can be used to manipulate each other on both ends of the deal. Just agree to a fair price and let the contractor worry about the details! You are free to ask upfront about what materials or anything else that they might be using in the construction of the job, have such written into the contract, is not necessary to know how all of those costs break down for one guy over another because each contractor is going to have a different way of bidding his jobs including possibly charging you for every single possible "unforeseen cost overrun" they can dream up along the way where another guy might simply stick to his bid no matter what he encounters along the way, because he is a man of his word! All that matters is the end cost to you the consumer, not every little cost detail because those details can also be manipulated. So, you the customer, end up over complicating what can be a much easier process to begin customers can be their own worst enemies when it comes to contracting.

[zyphryx]

I started giving customers a breakdown a long time ago. Several customers said they chose me in spite of the fact that I was the higher bid because I was more forthcoming so I've been doing it ever since.

[budedwards]

As a General Contractor I break everything down to show the homeowners exactly what they are getting.I show them my mark up and cost for each item that way they see I’m not hiding anything. This has gotten me more jobs in the end by not hiding anything. We do everything on a cost plus basis so it is fair for both sides if you start doing this you will win a higher percentage of the jobs you bid. Don’t hide anything and you will have more trust from the start.

[garycook]

I learned in the early 80s that handing a broken-down bid to a prospective customer is akin to handing them a shopping list. I found this out when calling the prospect after not hearing from him for two weeks. He had taken my sound system design and equipment list, and given it to someone else, and let them do exactly what I had proposed doing. That was a hard lesson for me.

[mss]

I have an hvac business. I always give an itemized list of everything we will be providing and doing. I tell them when we will start and when we will finish. I give them a price 5000$ for example. If they have a question “how much is the disconnect “ or whatever…I tell them. I have never had an issue or problem because I work primarily on referrals and I do good work. I have found that customers don’t care if you do what you promise but they start counting and keeping track if they don’t think you are doing what you promised.

[niveknospmoht]

I am a mechanic and used to have my own shop. Had a customer who owned a local restaurant and had me do all his work. One time he dropped off his van for some work and wanted a discount if bought his own tune-up parts. I asked him if I got a discount if I brought in my own steaks for him to cook. He never asked me again

[demar]

If you're giving a quote vs an estimate, then this practice is TOTALLY OK. I am a customer that asks for break downs when I get ESTIMATES, because I want to know when there is an overrun, what I can expect before the request comes....and to assure that I'm not just being asked for more money without clear reason. I have no problem paying more when there are material overages (not due to flagrant waste) or more complex repairs. But I've also witnessed a contractor (one bad apple) that would give an estimate, then ask for more to complete the job once the demo was done and the job half finished. Unfortunately, these bad apples make customers skeptical.

[Sluggo]

As a customer (and professionally a commercial project manager), I want a breakdown every time. You don’t need to break it down to commercial level, but if you give me a bulk rate project cost, you’re immediately put in the circular file (trash) and blacklisted from any future projects.

I’ll tell you why. In my experience (again as a residential customer and a commercial project manager [E2E full scope]), if a contractor isn’t providing you with a reasonable work breakdown, they’re hiding something or padding the cost in a “less than desirable“ way. I’ve found this to be true 100% of the time in both scenarios (tho bulk pricing in the commercial/industrial world isn’t a thing for that exact reason).

You need to create a win/win situation for both you and your customer. When you say “most customers don’t understand”, or “I’m just trying to make it a simple as possible”, you’re telling the customer they’re stupid and don’t have the ability to understand simple pricing. That’s insulting. If that’s how you choose to do business, good luck. Contractors (in all trades) are VERY sketchy and shady business people. I don’t know what it is about them, but even the very best fall into that group.

My first experience with a GC was in a water remediation and repair. I finally had to demand a full line item breakdown for everything. One example then I’m done, but ServicePro put over a hundred 1” moisture testing holes in our drywall. The “turnkey” included “everything” (which is NEVER the case) to make us whole again. My Spidey Sense was just bothering me so I halted work until the breakout showed up. He was charging me $10 per hole just to hot mud! If there is a contractor out there than can justify that, I’d love to hear from them. Each hole took less than 15 seconds in labor and maybe 1.2 cents (retail) in consumables. Recall, this cost was just the hot mud filling, finish and paint are totally separate.

Are all contractors like this? I don’t know, but I’ve been burned to some degree by every residential contractor I’ve worked with, without exception. And I do this for a living (not residential)! So when you hear “we’re just trying to make things simple”, RUN. You (as the customer) WILL BE scammed somehow, for sure.

[qjbbmvl]

Thank you for this video. Been doing construction for 50 years and I learned some things from you young stallion!😊
You mentioned the time you have to spend gathering all the materials, more than $100, 000 for your tools and equipment; you didn’t even mention the fact that you have to pay insurance, your gasoline, maintenance and repairs on your vehicles and tools, buying new replacement tools when the old ones wear out, all other overhead, whether that’s a small shop at your house, etc. The list of things that it costs you just to stay in business, goes on and on. $50 an hour labor is cheap, especially if you have employees you’re trying to give a little paid vacation or a few paid sick days because you want to bless him for their good work ethics, some bonuses, whatever it may be. $50 per hour is not even half what auto mechanic shops charge. Keep up the great work.

[birdnestfarms]

I respect your honesty but I would never accept a contractor refusing to break out their bid.

[chiplangowski]

As someone that hires contractors, I always get at least 3 bids. The bids need to be broken down in order to compare them and ensure that you are getting the same goods and services. I don't think I have ever gone with the lowest bid, but I have eliminated contractors from the bidding process when they refused to provide a detailed bid. It comes down to not knowing what they are trying to hide.

[tditekinstructor]

The first person I have seen that was able to explain this in an intelligent and well thought out manner.

[tobleroni]

You are absolutely right sir. I know nothing about the contractor business but I did work as a successful business to business sales rep and trainer many years ago. If you give them a bid, you have one objection to overcome. If you break out the job charges, you’ve now got a dozen or more objections to overcome. You’ve just made closing the sale an order of magnitude harder when you didn’t have to. I could sell a job and close a sale with a flat guaranteed rate 100x easier and more successfully than having every little thing broken out. “We guarantee our quality and guarantee our price. If we run into any unforeseen issues and have to do more work than we anticipated, which sometimes happens on jobs, we guarantee not to charge you one single penny more than we promised. Is that peace of mind something you’d like to have on all work that’s done for you? It is?, great, would you like us to start on Monday the 13th or Tuesday the 21st?” Then get the agreement signed along with the deposit and let them know you’re eager to see them bright and early Monday morning. (They’ll pick the earlier day of the two days you give them).

[spnetwork]

A few years ago when I legitimised my moving company, I thought average worker's comp rates of $20 per $100 was crazy but then I happened to look at what roofers and other construction trades were paying in my state for the insurance. Then I finally figured out why there are so many under-the-radar outfits operating.

[robmclaughlin]

I used to do fences in college and charged materials plus labor per day, it was just me. I would have the customer pay me for the materials when I brought them and the receipt to them before I unloaded. That way I never got bad materials and could return them if they freaked out about the cost even though the estimate was really close. Granted it was a real small operation but it paid for my school so I didn’t have any debt.

I loved it when the customer wanted to compare my single person labor to the ones with more people working on a per worker basis.

That was 35 years ago, it has to be a real pain these days.

Great video.

[thomasdrake]

From John Q homeowner:
I THOROUGHLY APRRECIATED YOUR HONESTY AND CANDOR IN THIS VIDEO.
This is a well spoken, clear and easy to understand video which explains a lot of things I personally have never understood about projects, estimating and bids. THANK YOU SO MUCH!

[LadderBarrier]

This depends on the job and the customer. People with money don't care, they just want the job done right with no headaches. These are my target customers. Nothing worse than working for people who cannot afford you.

[bwillan]

The main reason I would ask for a bid breakdown would be to find out what materials are being spec'd for the job so that bids can be accurately compared.

[buckshot]

I always buy material. I’m and electrician by trade. I just had a heat pump installed, I bought the units and all metal duct. Problem is I’m very particular, I buy the best material and most contractors buy the cheapest thing possible, I’m the opposite. Plus contractors mark material up too much. It also helps that I get most stuff cheaper than what every residential contractor can buy it. I’m old, 90% of contractors aren’t very trustworthy. I charge $100 an hour cash, or $150 an hour with check. Fence builders are laborers, they are the lowest skill base which equals lowest pay. They shouldn’t make same as electrician or a plumber that has to have licenses and lots of insurance. A decent contractor will always break down a bid, the contract should state what materials being used, it’s called scope of work.

[Miketheold]

I owned a construction company for almost 40 years in the beginning i would break down cost but i quickly learned it made more work for me to list everything and customers then questioned everything so i changed to a fixed numbers. I retired at 59 pretty well off iam 64 and still get calls asking me to do there jobs, i was proud of our work quality and was constantly booked 5-7 months out, there is allot of work that goes on behind the scenes that people don’t see.