Underpricing yourself

[rafezetter]

Talking of underpricing - I'm curious if anyone has views on which is the better route to deal with it - suck it up or attempt to renegotiate a bit, if it's quite obvious you've underpriced it.

 

[MMUK]

Talking of underpricing - I'm curious if anyone has views on which is the better route to deal with it - suck it up or attempt to renegotiate a bit, if it's quite obvious you've underpriced it.

It depends on the situation.

If I know the job will lead to more work then I'll take it on the chin providing that the job doesn't actually cost me money. If there's more work, I don't mind occasionally doing a job for free labour as I can always gain that back over the following contracts.

If it's a one-off I will try to re-negotiate. If that fails I just walk away and the customer loses any deposit they have paid (my contracts state all deposits non-refundable as they cover the cost of any site visits and design works carried out). It's extremely rare that I under price things, usually the other way around as I like to cater for unexpected problems.

As a quick and very rough example, the above table by the OP I would be charging somewhere in the region of £5k for with a 25% deposit.

 

[Random Orbital Bob]

and whats the daily labour rate assumption in that cost if you don't mind me asking?

 

[MMUK]

and whats the daily labour rate assumption in that cost if you don't mind me asking?

Assumed 96 hours @ £22 p/h +VAT

 

[vally bar]

Talking of underpricing - I'm curious if anyone has views on which is the better route to deal with it - suck it up or attempt to renegotiate a bit, if it's quite obvious you've underpriced it.

It depends on the situation.

If I know the job will lead to more work then I'll take it on the chin providing that the job doesn't actually cost me money. If there's more work, I don't mind occasionally doing a job for free labour as I can always gain that back over the following contracts.

If it's a one-off I will try to re-negotiate. If that fails I just walk away and the customer loses any deposit they have paid (my contracts state all deposits non-refundable as they cover the cost of any site visits and design works carried out). It's extremely rare that I under price things, usually the other way around as I like to cater for unexpected problems.

As a quick and very rough example, the above table by the OP I would be charging somewhere in the region of £5k for with a 25% deposit.

Let me get this straight, say you price a job at 4k the customer accepts the written quote, you take a depo of 1k but then you decide you have underpriced, so try and negotiate further monies the customer says no so you walk away and steal there £1000 and 96 x 22 is £2112 and £4150 @ £22 is 188 hours or about 5 working weeks.

 

[Fatboy]

I underpriced a big kitchen once, factored in everything incl appliances, flooring, lighting etc but in my eagerness to get the job I completely missed the labour charge. The customer refused to budge as they were already over budget, so I took it on the chin and lost a weeks wages - I wouldn't have even contemplated keeping their deposit if I felt I had to pull out; my mistake, my bill.

 

[bugbear]

Table advertised in the weekend paper;

http://www.swooneditions.com/french-sty ... ite-finish

Oak top, painted alder frame, with drawer, £499.

Height: 77cm
Width: 180cm
Depth: 90cm

Base: alder handpainted in white with slight distressing
Top: oak
Style: French country

Wowza, that's cheap. Designed and marketed in Britain, made in Shanghai.

BugBear

 

[MMUK]

Talking of underpricing - I'm curious if anyone has views on which is the better route to deal with it - suck it up or attempt to renegotiate a bit, if it's quite obvious you've underpriced it.

It depends on the situation.

If I know the job will lead to more work then I'll take it on the chin providing that the job doesn't actually cost me money. If there's more work, I don't mind occasionally doing a job for free labour as I can always gain that back over the following contracts.

If it's a one-off I will try to re-negotiate. If that fails I just walk away and the customer loses any deposit they have paid (my contracts state all deposits non-refundable as they cover the cost of any site visits and design works carried out). It's extremely rare that I under price things, usually the other way around as I like to cater for unexpected problems.

As a quick and very rough example, the above table by the OP I would be charging somewhere in the region of £5k for with a 25% deposit.

Let me get this straight, say you price a job at 4k the customer accepts the written quote, you take a depo of 1k but then you decide you have underpriced, so try and negotiate further monies the customer says no so you walk away and steal there £1000 and 96 x 22 is £2112 and £4150 @ £22 is 188 hours or about 5 working weeks.

You've failed to factor in the cost of materials :roll: Until all materials are purchased and you've started, you won't technically know
if you've under-priced or not. Materials would inevitably cost more than the deposit so I would end up losing out on paper.

And it's not "stealing" as you eloquently put it, it's standard business practise.

 

[ColeyS1]

You get prices of timber at the pricing stage- surely :|

Sent from my GT-I9300 using Tapatalk

 

[vally bar]

So you keep the depo and any purchased materials, what does the poor customer get for 25%?

 

[MMUK]

You get prices of timber at the pricing stage- surely :|

Sent from my GT-I9300 using Tapatalk

I was giving an example of how I normally price a job. I'm not talking specifically timber. A lot of the materials I use in the course of my work have regular price fluctuations. I offer my quotes as valid for 60 days normally, in which time materials could have gone up or down by as much as 30%. I do have this written into my contract terms as standard, which the customer reads and then signs. So if they then decide they don't want to pay the price hike, they forfeit their deposit. All my quotes are itemised so they know exactly where the increases are going.

 

[MMUK]

So you keep the depo and any purchased materials, what does the poor customer get for 25%?

If they don't abide by the contract terms they sign up to then yes I do. They don't have to sign the contract.

 

[JohnPW]

If it's a one-off I will try to re-negotiate. If that fails I just walk away and the customer loses any deposit they have paid (my contracts state all deposits non-refundable as they cover the cost of any site visits and design works carried out).

I think that's outrageous. I hope you make clear that the deposit is non-refundable. I doubt many customers would sign up if they realise they would lose the deposit if for whatever reason you decide not to complete the job.

 

[vally bar]

You get prices of timber at the pricing stage- surely :|

Sent from my GT-I9300 using Tapatalk

I was giving an example of how I normally price a job. I'm not talking specifically timber. A lot of the materials I use in the course of my work have regular price fluctuations. I offer my quotes as valid for 60 days normally, in which time materials could have gone up or down by as much as 30%. I do have this written into my contract terms as standard, which the customer reads and then signs. So if they then decide they don't want to pay the price hike, they forfeit their deposit. All my quotes are itemised so they know exactly where the increases are going.

What is it you use that can fluctuate by + or- 30% Curency doesn't even come close to that.

 

[MMUK]

If it's a one-off I will try to re-negotiate. If that fails I just walk away and the customer loses any deposit they have paid (my contracts state all deposits non-refundable as they cover the cost of any site visits and design works carried out).

I think that's outrageous. I hope you make clear that the deposit is non-refundable. I doubt many customers would sign up if they realise they would lose the deposit if for whatever reason you decide not to complete the job.

It is clearly stated in bold type. I've never had an issue.

 

[PAC1]

Talking of underpricing - I'm curious if anyone has views on which is the better route to deal with it - suck it up or attempt to renegotiate a bit, if it's quite obvious you've underpriced it.

It depends on the situation.

If I know the job will lead to more work then I'll take it on the chin providing that the job doesn't actually cost me money. If there's more work, I don't mind occasionally doing a job for free labour as I can always gain that back over the following contracts.

If it's a one-off I will try to re-negotiate. If that fails I just walk away and the customer loses any deposit they have paid (my contracts state all deposits non-refundable as they cover the cost of any site visits and design works carried out). It's extremely rare that I under price things, usually the other way around as I like to cater for unexpected problems.

As a quick and very rough example, the above table by the OP I would be charging somewhere in the region of £5k for with a 25% deposit.

MMUK, you are completely in the wrong. You had a contract for a given price for which you asked for and received a deposit. You then seek to renegotiate the contract otherwise you will refuse to do the work. You will find you are in serious breach of contract and have no right to refuse to do the work. A client would be entitled to sue you for the additional cost of having the work done by someone else and for the return of the deposit.
It has nothing to do with the fact that your terms and conditions say the deposit is non refundable. That would work if they cancelled the work but they have not. It is you who have breached the contract not them. If it were legal why not spend your life taking deposits and then refuse to do the work or give a refund!

 

[MMUK]

Talking of underpricing - I'm curious if anyone has views on which is the better route to deal with it - suck it up or attempt to renegotiate a bit, if it's quite obvious you've underpriced it.

It depends on the situation.

If I know the job will lead to more work then I'll take it on the chin providing that the job doesn't actually cost me money. If there's more work, I don't mind occasionally doing a job for free labour as I can always gain that back over the following contracts.

If it's a one-off I will try to re-negotiate. If that fails I just walk away and the customer loses any deposit they have paid (my contracts state all deposits non-refundable as they cover the cost of any site visits and design works carried out). It's extremely rare that I under price things, usually the other way around as I like to cater for unexpected problems.

As a quick and very rough example, the above table by the OP I would be charging somewhere in the region of £5k for with a 25% deposit.

MMUK, you are completely in the wrong. You had a contract for a given price for which you asked for and received a deposit. You then seek to renegotiate the contract otherwise you will refuse to do the work. You will find you are in serious breach of contract and have no right to refuse to do the work. A client would be entitled to sue you for the additional cost of having the work done by someone else and for the return of the deposit.
It has nothing to do with the fact that your terms and conditions say the deposit is non refundable. That would work if they cancelled the work but they have not. It is you who have breached the contract not them. If it were legal why not spend your life taking deposits and then refuse to do the work or give a refund!

It is not wrong. My contracts clearly state that quotes are subject to change dependent on material price fluctuations and/or specification changes. It is completely legal to retain deposits paid to cover any expenses accrued. If I've not spent anything then I will reimburse, minus a small amount to cover any fuel.

FWIW, I've not had to go down this route for more years than I can remember anyway so this arguement is entirely pointless. If you don't like the way I do business, tough dung for you. My contract terms were drawn up by a professional, international company. I think I can trust them to know the law over any of you on here :wink:

I'll say it once again - if you don't like it, tough dung. I'm not asking you to be my customer. I have hundreds of 100% satisfied customers and only ever one who I had trouble getting money from, until I served papers against him that is.

 

[glynster]

With regards to that table priced at £499: buying in turned legs at roughly a tenner each and making the rest from laminated furniture board (I'd bet a tenner thats what it's made from) all materials should come in at £100 ish. Set up to with jigs and templates, loose tenon joinery, biscuits and or pockethole screws (again £10 says thats how its thrown together) who couldn't knock out at least 2 of them a week if working full time - some would say 1 a day on average if batch processing. How is that not profitable??? Genuinely curious - this is not fine furniture afterall - its shabby-chic everyday furniture that only has to last 1 house move - maybe 2.

 

[Phil Pascoe]

Normal price £995! It is +£38 delivery, mind. We all know that the selling price is more than the material cost and someone's wages, though.

 

[beech1948]

MMUK is saying something different to what you have all assumed.

His contract terms are to protect him from materiel price fluctuations. The buyer is made aware prior to signing that he might be asked to pay more for materials. The contract states that he will pay the extra. If the buyer then refuses to do so what is MMUK to do. The buyer is in fact breaking the contract by not working to its specifications. MMUK is then entitled to say Ok well then I can not complete my part of the contract because you the buyer refuse to pay. Its all down to a non performant buyer not MMUK. Keeping the deposit seems again to be a contractual issue. It is what was agreed.

MMUK is right to act as he describes.

What I am curious about is what materials can vary by 30% in 60 days. Go on MMUK let us know please.

Al