Bidding thread

[Sberry]

We should work on a thread about bids, its the thing gives a lot of guys the most headache.

[user 9328330]

I'll throw in that a lot of companies have a price ceiling above which they are required by their management to get multiple bids. If your price comes in below that ceiling, they'll give you the job automatically. If you're dealing with a company who would honestly rather use you than somebody else anyway, they'll break the job down into component parts and as long as you turn in appropriately small bids for each part, you'll end up with the whole job anyway.

For example, you have a nationally-owned company who has a $5k price ceiling before requiring multiple bids. Their local branch wants a small demo and rebuild done which will total $11k and they want you to do it but they have to skirt company rules to make that happen. They'll break down the job into demolition, construction, and painting, and you'll bid each component at less than $5k and it all ends up working out in the end.

A company who really likes and trusts you will eventually volunteer what their price ceiling is. But first you'll do a lot of jobs for them that prove you're not going to take advantage of them. The guys on the ground understand that price isn't the only thing that a job should be awarded on.

[user 9328330]

Also, you want to make allowances for Murphy's appearance, because he usually shows up more on quoted jobs than on jobs by the hour.

For example, in my area the excavating guys always have a rock clause which basically says if they hit rock, the price is $x/hr to blast or hammer it out, and this amount is on top of the quoted price.

Jobs that are bid out are usually more profitable than jobs done on the hour. The reason is that if you screw up your bid, you end up working for free at some point. So what everybody does is to pad their bids by some percentage, often 10% to 30% over what they reasonably think the job should take. This is different than a rock clause type of thing, because if you do the job in the amount of hours you originally thought, you just made 10-30% more on the hour for your time. The rock clause type of thing is there to save your butt in very limited situations.

The point of this post is to show you a couple ways that people allow for Murphy's entrance onto the stage. Padding bids increase your profits *if you get the job*, they decrease uncertainty on the part of the customer, and they also decrease your likelihood of getting the job if your competitors pad them less than you did. Clauses like the rock clause keep your initial bid low, but decrease your potential profits because you don't get that money unless a specific situation occurs. They also introduce uncertainty into the customer's mind because they aren't a solid quote. Therefore, you should use them sparingly, like an insurance policy. Don't put clauses in for every little thing, only use them for unlikely things which would sink you if you didn't allow for them.

Basically, try to act in good faith and think about your bid from the customer's point of view.

[Sberry]

Good post. Yes I do some in smaller segments for the cap reason. I did a TM recently where the downtime after the repairs was a factor. I splain, if I contract it then there is incentive to save, if I am doing it TM I am looking for every flaw.

[duramax-rob]

Good post. Yes I do some in smaller segments for the cap reason. I did a TM recently where the downtime after the repairs was a factor. I splain, if I contract it then there is incentive to save, if I am doing it TM I am looking for every flaw.

thats cheating!!! LOL

[psacustomcreations]

This may be part of bidding, but may warrant it's own discussion.

Shop rate. How do you determine it?

On the Facebook plasma groups and Blacksmith groups it is common for someone to ask how much to charge for an item or service.

The standard answer from many members is:
(Hrs x shop rate) + materials + materials mark up, etc.

What is not clear to many is how these other businesses or people came up with the actual shop rate they charge.

The typical answer seems to be in the $100-125 an hour range.

New members, hobbyists, Side gigs like myself may not have the overhead a full time stand alone business charges.

Sent from my SM-G996U using Tapatalk

[user 9328330]

This may be part of bidding, but may warrant it's own discussion.

Shop rate. How do you determine it?

On the Facebook plasma groups and Blacksmith groups it is common for someone to ask how much to charge for an item or service.

The standard answer from many members is:
(Hrs x shop rate) + materials + materials mark up, etc.

What is not clear to many is how these other businesses or people came up with the actual shop rate they charge.

The typical answer seems to be in the $100-125 an hour range.

New members, hobbyists, Side gigs like myself may not have the overhead a full time stand alone business charges.

Sent from my SM-G996U using Tapatalk

I think you're right, great idea for a second thread that's easily found by title search in the future.