April 2019 President's Letter
Tuesday, September 17, 2019
Posted by: Trish Moss
How much is enough?
If you spend any time on tile-related social media sites, you’ll notice that the question, “How much should I charge?” is a common topic. People are frequently asking for affirmation or information on how to price their work.
In a previous letter, I mentioned that someone will always be willing to do less, for less. I have been asked what defines doing less, for less. It is when someone knowingly– or perhaps worse, unknowingly – does less than the requirements of the plans and specifications. Anticipating all of a project’s costs, contingencies and needs is a fine art gained with experience and a thorough understanding of the risks, opportunities and costs involved with any/all task on a project. Each task has a value. If you are doing less, for less, tasks not completed or completed poorly with products or materials below the specification’s requirements provide some an opportunity to do less, for less.
This is true whether you are pricing a residential backsplash or a new hospital. Provide pricing when you have in-depth knowledge of what is included in the project. Your proposal should identify any items that are not clear and qualify how you are going to complete the work. Knowing what each activity is worth is a moving target for each project. That explains why there is not one correct number for any single task. It is difficult for someone else to tell you how to price a project. You can’t price your project if you cannot place a value on your tasks. You need to know your costs. Then charge what you know are the costs of the task (materials, labor overhead, profit). You need to be able to support your price when evaluated by an informed buyer.
Preferably, all questions are answered before you provide pricing. If you say you are “interpreting” a project’s requirements to provide pricing, STOP. You have just stepped off the ledge into uncontrolled risk. The key word is “interpret” because this is where we can all get in trouble. Helping the builder/GC/owner resolve inconsistencies before presenting your proposal is the best opportunity to bring questions to the table that eliminate any need for interpretation and eliminate risk. This should ensure that everyone will be asked about inconsistencies and eliminate the necessity to interpret anything. Clarifying inconsistencies helps to protect everyone, especially the owner.
The best proposal is one that provides a highly detailed, well-qualified and complete proposal. Follow the road map in the plans and specifications. DO NOT interpret details, DO exclude or qualify any remaining unclear items in your proposal. The best opportunity for a fair evaluation occurs when interpretation is replaced by specifi c direction on where, how and how much material is supposed to be installed, and how and when it all gets there. If others are interpreting the project in a different way, they may happily exploit inconsistencies in the bid documents. In that case, unfortunately the lowest price – sometimes the least-qualified price – establishes the “VALUE” of the work in the marketplace.Yes incredibly, the VALUE of your work is often controlled by someone who is willing to do less, for less. With or without intent, the word VALUE becomes non-descriptive. The value now just becomes the low price. At David Allen Company, we like to say that we offer BEST VALUE. We may or may not be the low number, but we are confident that our number will provide a properly installed product over a properly inspected and prepared substrate. There are often very tangible reasons that pricing is different between any two proposals for the same work.
So, “How much is enough?” The easy answer is: “Charge what you can.” The value of properly installed work is great. Of course, that price is controlled by your market, balanced by the potential risk/reward your experience tells you about the job. There should be no need for interpretation of the tasks involved with the job. Only you can determine “How much is enough.”
Vice President, David Allen Company
Chairman - ANSI A-108
ChairmanUS TAG ISO T-189
Board of Directors ABC-VA
Voting Member TCNA Handbook
Voting Member NTCA Reference Manual