NEVER Break Down a Bid For a Customer: Here's Why!

Hey, everyone, it's Mike Andes, founder of Augusta Lawn Care and Copilot CRM. And today I'm talking about why I never break down a bid for a customer. And honestly, I hate time and materials, where a customer says, I want to pay you an hourly rate as well as just the materials tacked on top of that. And I hate it for a lot of reasons. And I want to explain why. Number one, it's bad. There's no, there's no real objective to working faster or more efficiently if you're getting paid by the hour. And this is, you know, this makes a lot of sense to business owners. And they. A lot of people would agree with me about time materials, but yet they still pay their team members by the hour, which also doesn't make sense because they're not incentivized to work any faster. And especially when you're paying your employees based upon performance. Like, the faster they work, the harder, and the harder they work, the more money they make. On P4P. P4PSoffer.com has all information on that. If you're paying them to be more efficient and then you're just basically charging the customer by the hour, there's no incentive to work more efficiently or faster and come up with creative ways of making the job go quicker. And so I hate time materials mostly because it deincentivizes my team to work efficiently and look for ways to be more efficient. Ultimately, it makes the boss the customer because they're going to be. They're. They'll literally be out there watching their clock, like, oh, four hours, five hours. Okay, they. They still owe me two hours. And if you put that you're going to charge them for seven hours on the bid and that you break down your bid based on, okay, we think it's going to take 7 hours and 4 yards of material or 3 gallons of paint or whatever. They will be clocking you. And they will literally tell the crew, like, oh, hey, you need to spend. I still have seven. I have seven hours. You guys still owe me two hours. Either I want a discount for the extra two hours, or you, I want you to do x, y and z more on the property. And it's setting up your team to basically make the customer their overlord, overlooking their shoulder the entire job. I don't want that. And furthermore, the customer doesn't see the cost of doing business. And that is the load time, the drive time, training the employees, doing safety, training the office, the administration. And if you actually show on time and materials, a markup on materials, they'll think you like robbing them. If you get charged $30 per cubic yard of rock and you charge the customer $50, they'll get mad at you the same way that if you tell them that you're charging 80 or $100 per man hour, they'll think you're absolutely insane. They'll be like, I don't even pay my doctor that much. So breaking down by time materials and showing those costs to customers I, I think is a losing formula. It's also bad for the customer because the customer doesn't want an hourly rate. They don't want how much the materials cost. What they really want is a cost to get the job done. And when they ask for a breakdown of time materials, what it means is I want to negotiate with you or they don't trust you. And so the goal is how do we create a brand where we they do trust us and that they really don't even need a price check us simply due to the fact that it's like if here's what I'm going to get for this price and it's very, very clear in terms of the description of what you're going to get as the customer. Now, if I was a customer, I would ask for a breakdown of time and materials if the description on the estimate was lousy. And so for a lot of contractors, they'll hear this video and they're like, yeah, I'm not going to do a time and materials breakdown. And therefore they will do sloppy estimates with very little description. And, and then wonder why people are always asking for time materials. I hardly ever get asked for time materials anymore. I would say less than half a percent of the time if someone asked me for a breakdown of time materials. Why? Because I give such an in depth description of what the job is going to include. There's no question that at the end of the job, at the end of the project, they will be getting all of these things for this cost. I see a lot of times contractors that get a lot of people requesting time materials. When I look at their estimate, it's like backyard patio install. Install pavers in the backyard, includes patio. It's like, okay, what's the depth of the rock, the base below, what sort of jointing sand are you using? What sort of edging are you using? What style of paver, what color, what design? Like, get all of that described inside of your estimate so there is no questions and they don't have to second guess. And there's a level of Trust that you professional and are going to go are going to get the job done according to what is the scope of work, I. E. The estimate description. So I really believe your estimate notes become your job notes. So whatever your crew needs to get the job done, make that on the estimate. So that way when the crew shows up at the job, they look at their job notes and the customer looks at their estimate and they look exactly the same. That's just my opinion in order to prevent any sort of distrust with the customer. And the last thing you want is your crew at the end of the job calling you and be like, hey, boss, we're finished early. But they said that they want a discount because we didn't use all the material. So again, if I put on my estimate that it's going to. We're going to install 40 yards of mulch and we only install 38. I'm not giving a discount to the customer. The customer's happy. I made sure that I did a walkthrough with them. I'm not giving them a discount. However, if the job takes 10 hours longer than I expected because the weather was bad, we had a flat tire, engine breakdown, we're not going to charge the customer more. And so instead of. I don't really like the term estimate, I really wanted to call it a bid. And because I'm not going to change that price unless the scope of the job changes. And so unless the things inside my estimate description are changed, the bid is not changing. And so I really like to think of, like, if a customer really was mad about it, it's like, look, that's the price no matter what. It also allows you to not negotiate on price. Like, Mr. Jones, if they're like, I want time and materials, it's like, look, this is all the estimate notes. This is what you're going to get. Here's the price. It's not going to change if something happens to our crew, if the weather turns bad, if we start digging and we hit a stump, like, we are not going to change this price over here. Now, obviously, if you can have certain clauses that like underground, you would change the cost. But you get my point. And that is we're not going to change the price unless the scope of work changes. And so if we take longer, guess what? You don't have to pay anymore. You know what you're going to get for that cost before we even start the job. So you can pitch this as a positive to the customer because really, someone who's asking for time, materials, Just doesn't trust anybody. They don't trust you to do a great job. They don't trust you to be honest in the forthright. And so the goal is, how do you have online reviews and get over that trust gap, but also have a great, great estimate description so they know exactly what they're getting and they don't feel like they have to ask for a breakdown of time and materials. Ultimately, they are paying for the result and it's a fixed price based upon the estimate description. It's like if you went to a restaurant and on the menu there's a burger, there's French fries, there's a pizza, the steak. And next to them is what the price of every single one. You don't haggle, you don't ask for a breakdown of the cost of the steak versus the cost of the material versus the overhead recovery for having the restaurant and the lease and the utility. These you don't. Because honestly, on a, on an $80 stake, the steak probably cost them 10 or 15 bucks. So is it highway robbery that they would charge you five times as much as they could get it than themselves? No, that's the cost. If you don't want to pay, you can go someplace else. And so when someone comes to you and asks for a breakdown of time and materials, what they're really telling you most of the time is they're not the right customer for you. Now, I assume in this regard that we have a very clear menu. In this case, the menu is your estimate description and the pricing. Assuming that that is clear, concise, and you have a great online presence to be able to show your reviews, to garner trust. Like, I expect that when I order the steak, I'm going to get steak on my plate. Like, if I had some level of distrust in that, I wouldn't go to that restaurant. And so if someone doesn't trust you to deliver on the promises of your estimate, they should probably go someplace else. And they're probably not gonna be a great customer for you. If someone, if you went to a restaurant and they were like, so how big is this? Like, is it really 10 ounces? Can I weigh the steak before you bring it out? I wanna make sure it's exactly 10 ounces. They're probably not gonna be a great customer. And so a lot of times when someone asks for breakdown of time materials, assuming your estimate description is solid and assuming you have a great online reputation, they're probably not the right customer. If they're asking for a breakdown of time materials, and they're gonna probably cause you a lot of headache. And so the real question is, what do you say if the customer actually asks for a breakdown? In my opinion, you don't get smart with them because there's a few things you could say. You could say, well, there's two. Here's the breakdown of the. Of the estimate. It is $2,428 if you accept it, and it is $0 if you don't accept it. You could say that. Is anyone going to accept the job after you do that? No, because you're being a bit of a jerk and you're being a little bit smart. You could do it in a funny way, maybe, if you can deliver that in a very funny way. Potentially. It depends what the relationship you have with them. If you're doing this in person, you could probably pull off a funny joke style. But usually you could also say. You could also say something along the lines of a restaurant like Mr. Jones, when you go into McDonald's and you look up on the menu board and it says $5 for a big Mac, that's the price. That is the price for the. This is what you're going to get and it's not going to change. And you can either say yes or no. You could do that too. I also don't think you're going to be able to close that job again. The question is, do you even want this job? Because this customer might be a bit of a hassle. But assuming you want the job and you believe that they're just kind of throwing this out there because they maybe got burnt in the past or they're just a little bit hesitant and you want the job. I would just be really honest with them. Be like, Mr. Jones, we don't give a. A time materials breakdown or break down the estimate, but what you see on that estimate is going to be the price for everything that you have in that you see in the estimate description. And the only way that would change is you change the scope of work on us in terms of how many plants we're installing, how much mulch we're installing, or you change something in the estimate. So read the estimate description and if, if you think that price is fair, let's go ahead and get the job on the schedule. And I really believe that doing that and moving directly into the close, which is, in fact, we have a spot available next Thursday. I think we can get you on the schedule. Let's go ahead and get the deposit paid today if you just keep rolling. Because again, the Customer, they just want their problem solved. They didn't call you for an estimate. They called you to get the problem solved. So get them to that as quickly as possible and get them past the notion that they can't trust you. You're going to do a bad job, you're going to screw them over. Get past all of that by saying, Mr. Jones, and you want to slow down and really invoke, evoke, trust. Here is like what you see on the estimate we are going to perform for that job. And if it takes us twice as long because the weather gets bad, you're not going to get charged anymore. You're still going to get charged at $2,400. It's the exact amount that we charge you. And so what you're paying for today is all the things in the estimate description to get completed to your satisfaction. If it's not done to your satisfaction, you won't pay me the rest of this bill. And if you're that confident in your service, you can say that knowing that you'll be able to get the job and be able to do it efficiently and reward your crew on pay for performance to get it done more efficiently. Because if, if you schedule, you know, do estimated two days of work and they get done in one, I don't want to penalize them. I don't tell them, yeah, guys, you gotta go back because we bid it for two days. I don't want them just chilling out. I don't want the customer leaning over their shoulder the entire time, clocking them, watching how much material, how much. I don't want to have them to have another boss in the form of the customer. So that's why I don't like time materials. That's why I don't give a breakdown of my estimate. And that's how to respond if someone does ask for a breakdown of materials and labor and you still want the job, hope that helps.