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Thread: Starting out- first semi-formal bid propsal. Need help.

  1. #1
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    Starting out- first semi-formal bid propsal. Need help.

    Hello.
    Haven't posted in awhile as i've been trying to find time to start a business with young kids, getting divorce, other issues, etc.

    Anyway- i have a connection to get a job making some signposts in my hometown with a decorative CNC cut top. Haven't done any business classes or school.

    Fairly straight forward fabrication, but i had some questions about how to make my bid professional but also really want the job as it is great potential visibility in my hometown, marketing opportunity, etc.

    1) How detailed do you get with your bids? Personally, i want them to see what they're paying for and give a boilerplate explanation of all that is done while clarifying what is or is not included, but i don't want to show the exact price of every material for example. Do you markup your materials based on S&H considerations? Include a separate line item? So what do you include?
    2)if i get the job or if they accept initial proposal, How do you guys draw up a contract? Do you ever require a down payment or deposit? should i do it basic by myself or find legal help?
    3)How much do you guys charge for basic shop rate, from what i've seen on here, varies greatly $75-200/hr. I had planned on starting much lower than that until my process is proven and to possibly increase my marketability, but i know there are obvious downsides.
    4)The proposal will include creative design and CNC work, i had assumed that i would charge more for that hourly, but it does not exactly include as much overhead, so how do you guys price creative work and table time as compared to general shop rate?
    5)Do you guys ever include a separate line item for a discount or "comp" for marketing consideration if an item is to be installed in an area of high visibility?

    Yes i realize i am clueless. I appreciate any and all thoughts.

    Thanks
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  2. #2
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    Re: Starting out- first semi-formal bid propsal. Need help.

    Personally I have not done formal bidding so keep that in mind as you read my suggestions. Lately people are glad just to get something done without a lot of price shopping.

    I would be precisely vague. Huh? I would list everything that is included in broad lines like material price and specs (gauge), if painted/powder coated, delivery/pickup, installation (material and technique), etc. I would even state plasma cutting at $?/ hour without specifying the number of hours because you’ll likely eat a lot of the hours, but if they ask for changes or additional work you have something to refer to.

    Just be sure your costs are covered plus. Many add 10% of materials or subcontractors in the total to cover delivery and float until you get paid. Don’t forget extra labor or contracting, consumables, mileage, or equipment rentals that may be required.

    Add some for contingencies like cutting an underground cable, etc. Then expect some negotiations so have some added in that you can afford to throw out. My old boss said when negotiating “make them tell you NO” meaning negotiate and ask for everything you can until they finally say no. A lot of purchasers think they must get some discount or they aren’t doing their job. So give them some consideration then say “no” to anything else.
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  3. #3
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    Re: Starting out- first semi-formal bid propsal. Need help.

    Ok interesting. One of my biggest difficulties is being my own salesman so that is good to keep in mind while negotiating on my own behalf.

    This particular job doesn't involve finish or install so it's ideal for me in a few ways.
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    Re: Starting out- first semi-formal bid propsal. Need help.

    I give a fair amount of detail, but often just refer to a drawing if one is available. I only give one price, and the is whatever is described and delivered or installed (whichever they want) I don’t list materials or labor, it just gives them ammo to try to knock the price down. The biggest trick is getting the price high enough to where they make a face, then give you a deposit. Too high and hey make a face and tell you to screw off, too low they smile and give you a deposit.

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    Re: Starting out- first semi-formal bid propsal. Need help.

    Was there an advertised open for bids? If so, what did they specify as requirements in the ad?
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    Re: Starting out- first semi-formal bid propsal. Need help.

    Just put the basics or customers will chisel you. write all the steps material types and one price. Local sign shop does not even put little stickers on his work anymore. If your good it will speak for it's self. Take pictures and such for your own media. I usually figure up the jobs at what I think I should make, Then my mom doubles it and I still get the work. Most important thing for me has been honesty, a good hand shake and a likable personality. With Municipality's Just give them the price your going to make money at and do it for that or get sued...

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    Re: Starting out- first semi-formal bid propsal. Need help.

    Do you meet the minimum requirements as a business to bid? Bid to make money and don't compromise because it seem like a good opportunity for promotion. Anticipate current market pricing instability. Double,triple or quadruple what you think you can do it for.

    I looked at a potential job today. The initial contractor is AWOL. He started this job 20 weeks ago. If he did not acquire all the material upon approval and deposit acceptance , then he may be screwed due to current prices.

    So, don't be timid on the bid.

    Good luck.

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    Re: Starting out- first semi-formal bid propsal. Need help.

    Thanks for the feedback.

    When i say "semi-formal" i mean i went to school with the wife of the guy who offered me the job. So i know it's far from formal or official but i want to start to rehearse the proces for myself. I just want to make it look professional in case he passes it on to other city officials. I can produce my welding certs if need be.

    I always wonder how big people's eyes get when they see how much even mild steel costs.
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    Re: Starting out- first semi-formal bid propsal. Need help.

    Quote Originally Posted by IronBear View Post

    I always wonder how big people's eyes get when they see how much even mild steel costs.
    Some take it OK and some think you’re making your new diesel truck payment on their job. I’ve increased my markup since cost to get the materials has increased, electricity has increased and insurance has increased (never had a claim). Have lost some business but decided long ago after poor bidding procedures that I could sit home working on personal projects not making money instead of working my tail off and not making money. Easy to take a little off the top if the job came in under budget but very difficult to add when it goes over.
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    Re: Starting out- first semi-formal bid propsal. Need help.

    Quote Originally Posted by IronBear View Post
    I always wonder how big people's eyes get when they see how much even mild steel costs.
    The customers who will keep you in business long-term are very familiar with what things cost, and will be at least slightly suspicious if your price comes in under the range they're expecting. They know that our expenses are higher and that they can expect to have these costs passed along to them. There's nothing that any of us can do about it.

    Don't feel like you need to justify or explain every part of your bid to them. Trust me, others aren't. And if they haven't asked about it, apologizing in advance reflects badly on you.

    One other item related to your original post: I never discount for 'marketing' purposes. This is really often pie in the sky. I either work for my full hourly rate, or I work for my hourly rate times 1.5 or 2 depending on the situation, or I work for free. Nothing in the middle. No friend discounts, for example. I work for my friends for free, or I say that I'm too busy and that they can take their work to a local machine shop that I can recommend.

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    Re: Starting out- first semi-formal bid propsal. Need help.

    I have all kinds of schemes depending on who it is. I agree with the guy says his Mom doubles it and thay is a great system to have help. I rely on helper makes a school of great whites seem timid. Sent her to buy a truck yesterday, called the guy back later to see if he had any hair left.
    I still have to fight some of my early business advice, was so ingrained that its a problem. Charged 200 to a guy the other day and was suggested if I charge 50 I might get more work Duh. I agree, do not discount in those hopes, the art is what they see and that is what does the advertising. (I got to wonder how many more cnc cutters the world can tolerate, seems lots of people got them.
    Add other art to these jobs to separate you from competitors, if it earns them money they will come.

  14. #12
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    Re: Starting out- first semi-formal bid propsal. Need help.

    This is an experience question only really.

    Here is how things play out with this sort of thing.

    1- 3 to 5 line quotes

    A- you end up getting screwed because you were very broad
    B- this normally looks better then 3 to 5 page quotes because you are just trying to get jobs done
    C- you dont really have a way to do change orders
    D- the company person you are dealing with likes 3 to 5 line quotes because they read only 3 lines of any quote anyways
    E- this works best if your trying to get into a place because you dont hold everything to the torque of an anchor bolt to exacting standards
    F- since there are no standards in your quote, you have to deal with any repercussions of their people doing something wrong from something you did first.

    2- 1/2 to 1 page quotes

    A- you seem like you know what your doing
    B- your customer can see how much you BS the quite if the read the whole thing (doubtfully)
    C- you set some standards but you understand you are doing the job and taking affirmative action over it
    D- change orders are understandable, but you will get resistance because you were still sort of broad
    E- your starting to get longer on your bids so your customer could read it as a way to get out of certain things
    F- how much detail do you go into certain items depends on each job


    3- 3 to 5 page quotes

    A- your customer wont really read it all, but is pretty sure that they are going to get screwed somewhere they didnt expect to
    B- change orders are a huge PITA because you specified no lock washers and now they are required
    C- not dotting an I in the bid opens you up to stupid items
    D- long bids vs short bid compared to other companies can either make you or break you depending on the customers mood
    E- better spec everything or else its an incomplete bid
    F- longer bids are a hassle on both sides but lawyers love them. Either way they make all the money
    G- it takes forever to change long bids and you have the possibility of stating the same thing 2 ways and looking like a dumb butt
    H- if the customer does read everything, they normally nit pick back on the details


    It's a damm if you do, damm if you dont type of thing.

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    Re: Starting out- first semi-formal bid propsal. Need help.

    Yes. Too much detail will propose too many questions. Also as others have stated make sure to mark up your steel. If you are doing your own CNC plasma cutting and you have a fault or an issue with the CNC table and have a mistake where you cannot fix the boo boo, who is going to eat the material to make the part correct. YOU ARE. So make sure you have this covered. Trust me on this one. It has happened to me. Now I mark up accordingly. Also have confidence when explaining a process or your estimate, but don't be a typical used car salesman and promise a Caddy when they buy a Yugo. I have found not to get buddy buddy with customers either. Just talk business an be done. I just gave an estimate to a customer and he flipped out and told me I am crazy. Ok bye. I told him I will not work to break even, then it is like working for free where you could be doing something else with your time and make a profit.
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