Small ethical question on bid

[feinddj]

I work on bids for my own business (thousands) and for a company I work for (hundreds of thousands).

Experience will tell you how long it will take to do a job. The more experience, the easier it is to estimate. But new materials, new techniques can throw a monkey wrench into that mix.

Hours to accomplish: Have a shop rate and know how long it takes including coffee breaks, plumbing leaks and all the rest of things that happen in your shop.

Materials: Not just the list price, you have to price in tax (if you don't resell), time to order, time to pick up or price of delivery, unloading and stacking and prep.

Expendables and other expenses: router bits used for the job, tape, glue and cokes.

Get that number and then add at least 10 percent. That's your bid number. Big businesses make money by being very specific about the work to be done and then charging for add ons/change orders at a higher rate with both material and labour. In my experience, going with the low bid on a job usually ends up costing much more than the actual bid. That's an opportunity to educate your client. They typically learn when they go with the low bid.

If you are in business to make a living, to make a profit, you must realize that your customers value your service, speed and quality. There are jobs that you will not get. But if you can't make a profit on them why do them?

[bob_reda]

Just another reason not to ask for more is that the customer probably had bids from a few different people. The next lowest may be say $100. If you go back now and ask for $250 more what would that look like to you? I know you said you will stick with the bid, which is the way to go. But the next time you run into something you haven;'t done yet, try talking them into a protype before you bid. There you will find any glitches you might not find until the job started. You would be surprised how people like that idea, and they can see the product also.

Bob

[Ajcoholic]

So, I recently took on a job to cut, do a little internal pocket and finish maybe 280 bamboo blocks out of a 4' x 8' sheet of bamboo ply. Cut, sand all edges, including a small chamfer, to 220, & oil.


Never worked with bamboo before, didn't have an idea how hard it was, so it seems I underestimated the cost of sanding belts and time involved in getting them ready to finish. Probably at least 25% low on my bid. Now I bid close, so there isn't any cream to work with and I'll not make my hourly at all. I'm probably looking at eating $250 worth of time and consumables.


I have every intention of completing the job as bid if I have to, but I just wonder what you guys think about the ethics and practicalities of presenting my issue to the customer and asking for a bump in the bid? How would you present your case? Or would you?

Don,
Unfortunately I have to say, if the issue was your lack of experience than you should eat the mistake.

Many times in my career (now just finishing up my 20th year full time custom woodworking) I have under-estimated materials, or time, or had some unexpected problem. I always say if it is something the customer changes, adds etc after the quote has been accepted than it is their responsibility.

But, if the problem was of my doing - for whatever reason - it is my fault and therefore I pay.

The only time this is different is if I am asked to do something unknown, I explain to the customer I might have to do a trial run to give a definite price quote and they accept the terms. Rare but it does happen with me from time to time.

[harryball]

I agree with all said, sometimes it's the cost of education. I've made the same mistake in the past as well and always honored my word. But make it clear on delivery that this was a one time deal. I would NOT be afraid to tell them it was because you accidentally under-bid. I don't like making carp up just to make a good story, just tell the truth. If they are a good customer, they'll greatly appreciate the honesty and use you again even if you bid higher next time.

I've done work simply because the customer KNEW if I said I'd do it, I would do it and there wouldn't be any carp to deal with during or after the job was done.

Let me tell you a short story about a guy named Macon who ran a grading business in the late '80s. He was notorious for bidding on jobs then doubling or tripling the price when the job was finished. He worked on a lake for us, bid about $5000 for the work he was doing then gave us a bill for almost $15,000. Said, "Well, the time on the clock is the time, I told you I thought it'd take this long, guess it took longer." Some people building a barn he'd quoted $3000, charged them $9000 and threatened to place a lien if they didn't pay. He ran through all the contractors and builders he could swindle pretty quickly and resorted to residential work. Well, even that ran out. They guy got desperate and even gave me out as a reference a few times. Those calls were a hoot. I told one guy he'd have to be brain dead stupid to do business with him. In the end he had to file for bankruptcy. He couldn't get work with any bid. The guy was a vile, swindling, lying, no good cheat and we had a little party the day he died.

/RB

[cnc_works]

Many MANY years ago, hadn't been in business all that long, underbid a bunch of showcases for the long dead Chocolate Express company. Ended up making close to minimum wage. Delivered a beautiful product, customer extremely happy, wanted many more. Told him I couldn't, didn't make wages. He said "I'll give you an order four times bigger". Yeah, I was excited, four times as many hours at minimum wage.

And a kicker, he called me in a panic and told me that he had to have part the order early on a certain date to distribute them to stores. Pulled an all nighter to get them to him, delivered them. Delivered the next part of the order two weeks later to see the early delivery sitting in the same spot I had put them.

[MogulTx]

I have underbid a few things in my career.... and didn't enjoy not "making out" on them. I have used the honest approach of telling the customer that I had erred and underbid the project compared to the actual time and materials it took to complete the project. And stuck with my original bid. (but bid higher for next time around) I am very OK with paying for my mistakes.

I recently had a customer call me in a huff, wanting to get a very custom product, and wanted it FAST and wanted it at about 1/2 of what the work really needed to be priced at. I gave him a rough price to complete it on a rush. He squalled and squalled and told me that he could get the "Best XXX available" for half that money... I told him that he should go buy it from the other supplier. I literally ( several times) told him that he needs to go buy from the other company. I can not perform for him in the time frame he wants. Nor at the price point that he wants... so go buy from the other guy...

(The bad part for him is that he is incorrect. He can get a crappy quality part that will not do what he needs done- He does not know how to spec his project, what materials need to be used, nor how much effort it will take. But he WILL buy at that lower price.)

I thanked him for asking me to look at his project- and know he is under-informed, and about to spend some serious cash and not get what he wants. But you can only do so much to inform and serve. Sometimes you just have to let a project go. On this one, I am thrilled that I did not get involved with the customer. There will be lots of expense and regret for both sides of any transaction HE is on.

[TJ Cornish]

I have underbid a few things in my career.... and didn't enjoy not "making out" on them. I have used the honest approach of telling the customer that I had erred and underbid the project compared to the actual time and materials it took to complete the project. And stuck with my original bid. (but bid higher for next time around) I am very OK with paying for my mistakes.

I recently had a customer call me in a huff, wanting to get a very custom product, and wanted it FAST and wanted it at about 1/2 of what the work really needed to be priced at. I gave him a rough price to complete it on a rush. He squalled and squalled and told me that he could get the "Best XXX available" for half that money... I told him that he should go buy it from the other supplier. I literally ( several times) told him that he needs to go buy from the other company. I can not perform for him in the time frame he wants. Nor at the price point that he wants... so go buy from the other guy...

(The bad part for him is that he is incorrect. He can get a crappy quality part that will not do what he needs done- He does not know how to spec his project, what materials need to be used, nor how much effort it will take. But he WILL buy at that lower price.)

I thanked him for asking me to look at his project- and know he is under-informed, and about to spend some serious cash and not get what he wants. But you can only do so much to inform and serve. Sometimes you just have to let a project go. On this one, I am thrilled that I did not get involved with the customer. There will be lots of expense and regret for both sides of any transaction HE is on.

Yep. You've got to know when to fire your customer.

Sometimes it can be hard to do that if you feel like you need the work, but taking on work for a big discount just because you are slow will ultimately bite you in the end - the customer will remember what they paid the last time and demand it in the future.

As they say, bad business isn't better than no business.