"Loss Leaders"
Should you take jobs you don't want in hopes of landing future work with the same customer? December 28, 2005
Question
I did an estimate for six projects for a customer. Four of them are cabinetry related and require brainwork and quality, both of which I have and can do with my fully equipped, full time shop. These same four went out for competitive bid. I was told I got the two easy, lesser quality projects. I haven't gotten the word yet on the four, but I'm thinking I won't do the two if that's all I get. My whole thrust is being a quality cabinetmaker and not a handyman. Would you do those two jobs - or not?
Forum Responses
(Cabinetmaking Forum)
From contributor A:
If it paid well, I would probably go ahead and do it. I'm just starting my business so I do a lot of jobs that I really do not want to do.
From contributor B:
I am confused as to why they are breaking up the job like that. Is there future work to be had with this customer? If so, I would do the smaller work and put some of your unique touches on it or go above and beyond a little to secure of some the future work. I would make sure that you are not burning any bridges. I would want the whole job. If you’re not good enough in their opinion to do the quality work and that is what you specialize in, I think I would go on down the road. Maybe there are some underlying factors that you are unaware of.
From contributor C:
When you bid these, were you asked to breakout all the items on the bid? It sounds like something I have seen in past, where everybody is asked to bid, broken down to items. Then the customer just picks the cheapest number on each item. Where you might have added a bit to be safe, another guy may have decided that’s where he would take a hit.
If the above statement I made is true then the customer could not care less about your abilities, quality, etc and I would let that decide it for me. For me, if the above was true I would not take the work unless I really needed the money and then I would give him only what he is paying for - the cheapest and fastest job - then get my money and go.
From contributor D:
I learned a long time ago - never do any job that is not profitable. I do not rely on future promises of work to come or of potential work. You should make money on each and every job. Also, do not take anything personally. If the job is profitable, do it. Otherwise let him find another person to do the nickel and dime work.
From contributor E:
I see this all the time. A customer wants bid broken down room by room to see what they can afford. The next thing they say is that they got other bids and want you to do only "this room". What they don't know, is that we usually bid "give and take". We charge for a filler, but we don’t make any money from it. Some items pay for the others. The kitchens are the bread winners. We only do the basic vanities because they go with the $30,000 kitchens.
From contributor F:
I've been like contributor A for the past year - take everything, hoping for more. Now I'm struggling and am going to do the big switch and only do streamline work - jobs that are 85% or more shop work then the install. Kitchens are what I intend on focusing on also. Every job like the original questioner describes has cost me money. Right now it is just me and my brother. I'm the main builder. Every time we do field work the shop sits vacant and the production stops. So I'm telling people that I have a certain price before I will even bid on a job. For instance I won't bid on a job that is less then $3,000 for paint grade (we install unfinished and they have to pay a painter seperately) or $5,000 for stain grade. We intend on staying like this until our growth is consistent. I like doing the detail work but it's killing me. If you shoot for the bigger jobs and price it accordingly that's were the money is.
From contributor D:
I remember a job where I quoted the customer for two entertainment centers for her house. I gave a break on the smaller entertainment center in order to get the big fat job. The lady thought that she was slick by telling me she was only interested in doing the small one first and then based on the quality of my job she would do the bigger one, where my profit was.
I quickly explained to the lady that if she was only doing the small one the price that was quoted would be bumped by 50%. She tried to argue with me but I told her that it was up to her to decide and that was my price. She still went with me because other shops didn't even want to come out and quote that job. I also explained to her that if she eventually did the other job I would take off a little bit in discount but that it would not equal the original price, as my expenses would not be the same having to deliver and install and fabricate twice.
She loved the job, as she repeatedly told me. I never got the second job, and she never went through with it. I know, since I went a year later to adjust a door. The lesson here is to never believe the customer's promise of future work. Make sure to make a profit on each and every job. I don't care if it's a huge contractor or a customer. I don't do any jobs where I don't make money. Don't misunderstand me - if I had a good customer who wanted a small vanity, I won’t turn him away, but I would price it where I would make a profit. I know that when I buy from other businesses they make a profit on me every time and if they don't, they won’t stay in business.
