When the Customer "Cherry Picks" Your Bid
A cabinetmaker bids on a whole house project, but only gets part of the job. What's going on, and how should he respond? February 6, 2010
Question
I bid a residential project at 240K. The builder said my bid was in the middle. Great, perfect, just where I want to be. The builder gave me a contract for some of the rooms and gave my competitor the other rooms, based on who was lower for each room. I got the kitchen, wet bar, family room and club room (kind of a study). Now, I'm happy to have the work - this is for a big time architect who I did a sales number on and it got me this opportunity - but isn't that a crappy thing to do?
Forum Responses
(Business and Management Forum)
From contributor H:
It's called cherry picking. I got caught once by this and learned my lesson. Now if someone wants to cherry pick my quotes I either walk or explain to them that my price was based on the total volume of the job. Less volume means I need to raise my price on the items selected to a profitable level. I am in a position to do this. Some folks are not. And in today's market... Like you said, happy to have the work. It is a crappy thing to do.
From contributor C:
I am working on a much, much smaller job than yours. The first new construction that I have bid on in two years, by the way. Modest home with three baths, laundry, kitchen with upgrades from the specs.
The homeowners did the same to me. He tried to get lower bids, but she insisted to use me at least for the kitchen.
I think contributor H is right on. He took my kitchen price and added it to another's price for the balance and it was about 3K more than my price for the total. I too am very glad to have the work, but felt as if I was about to get the short end of the stick.
From contributor B:
This happens to us all the time on big projects. As per contributor H, when possible we use the volume = efficiency argument to revise pricing. Also any revised drawings we made and any finishes that we have developed are our property. We will sell them but the rate is rather exorbitant. Last (but not least), we make sure that the work we deliver makes the client regret not having had us do the whole thing. We have one client who, on the first job we did for them, pulled out a lot of the work for reasons of budget. Ever since then he pulls out all the stops to have his clients use our work exclusively. Not trying to brag; I'm just saying that quality wins out every time, and maybe next time you won't get cherry-picked quite as much.
From contributor L:
When you are bidding large projects such as this, you need to have a stipulation in your proposal that states that the prices quoted are only good if all the work is done. If the work is to be cherry picked, the prices will be different (higher) because you are giving them a better deal because all the work was being done in the same location. The savings comes because you would have been there for a longer period of time, making it more efficient for your company to operate.
In these times, I'm not sure if I would complain too much. If you had plenty of work, I would have brought it up to the GC/HO. But if you need the work, just let it slide. Stay busy and make some money. We will come out of this and all will be well again. You just need to survive that long.
From contributor M:
I fail to see why it would ruffle anybody's feathers. If it was me, I would view it as a fantastic opportunity to showcase my work, regardless of the economic climate. So what if it only was part of the job? I would still charge what I needed to cover my target price. I use an estimating software called Business Partner. Each room is priced individually and each includes its individual installation, so it would not make a difference if they cherry picked. There is a stated delivery charge, which includes the estimated number of trips for the entire job. That would have to be adjusted but not necessarily given away. It should not matter what method of estimating is used - all elements of the price need to be included.
From contributor E:
If you priced it out as individual rooms, great. But usually when you price out a job like that, you do it as a package. When I do that I give a discount because it is a large amount of work in the same place. Now that the work load has been reduced, likely your profit margin has also been reduced. It sounded like he priced this out as a package deal. When you break the package, the deal changes.
From contributor I:
Happens all the time. You should understand before you bid the scope of work you're asked to bid and you should cover all your costs and include all your overhead and profit in the portion you're bidding. If the customer chooses to purchase only a portion of the scope you have quoted, then you should provide a new quote for the new scope of work.
From contributor N:
If you could use the work, impress a new contact and still make an acceptable profit, I would do the work no questions asked. When the job is completed and your work has been showcased, casually mention your difficulty in breaking up an estimate. You'll be able to feel out if this is his normal practice, and if so bid accordingly on future jobs.
From contributor C:
I do some insurance restoration "custom" when it is required. Recently the homeowner wanted something additional and stated it had nothing to do with the scope of the damaged area. Very small job for that part, and he called me and asked for a price. I told him that due to the size and nature I felt like the same cabinetmaker should do the work and would not give a price until I was awarded the kitchen just to make it cost effective. He said he would do the same and very much understood. The location is a 45 minute drive one way.
I use a percent price for most installations. How can anyone cherry pick without applying a different method for pricing? Not all cases fit in the same mold. That is just one reason it is called custom. Makes sense to me!
From contributor Z:
I work for a GC and we sometimes use two different installers on the same job when our schedule has gone down the drain and we need the cabs/tile/floor/whatever done yesterday. I know it's not ideal, but as was stated above, "give a new quote for the new scope of work." We always ask for new quotes from subs when something has changed. That way the customer is not surprised by changes in costs, and the subs are treated mostly fairly.
From contributor T:
Hopefully you priced each room you did get for a reasonable profit, as walking away in this market isn't reasonable. In addition to saving money the builder may have been spreading the work between the two to help keep you both in business for his future needs, not such a bad practice. It's just business, not personal.
In the future you may want to add a statement to all your bids to cover this scenario. It gives you the option to raise your prices or not. The more things are in writing up front, the less squirming later. I've used the following for years...
"Prices are based on Total Order and costs and conditions existing at the time of quotation and are subject to change by the Seller, XYZ Corp (your name), before final acceptance."
Pat yourself on the back for getting your foot in the door (no small feat these days). Do great work with a smile and no grudge. You may get it all next time.
From contributor J:
I haven't bid any job as extensive as yours, but even on smaller jobs I bid out each part separately and then add a discount for doing all the work.
The job I'm working on now is a small kitchen, vanity, entertainment unit, and some miscellaneous panels and doors. I gave a quote that listed each part individually (since that's how I figure my cost anyway), then I add a line at the bottom that basically says if we do everything the price will be $X lower. I explain up front the reasons for doing this and people understand, as it's pretty much common sense. The more you buy, the cheaper it is.
From contributor P:
If you were required to separately price each room, you could expect that each quote should stand on its own. I'd prefer this to an "all or none" scenario, myself. Better chance of winning something. If you weren't required to price each room separately, and you chose to, you opened the door to the cherry picking. Did the GC's bid package state that the whole job would go to only one bidder?
From contributor O:
I fight tooth and nail to avoid breaking down a bid so they can cherry pick. If they want us to break it down, the price goes up. I tell them that the attractiveness of the job is as a whole project, not part. When it does happen, it seems as though we get the more difficult custom work and they buy the cheap stuff from whomever. The flip side of that is, I've been told numerous times that "we'll never do that again" because our work is so much better than where they buy that less expensive stuff.
Who will they remember doing the job? Will they remember that you did this part and someone else did that? Or will they just remember that you were there and they aren't sure who did what years later? And you get the reputation for shoddy work. Which proves my point. That's one of the reasons I hate to break up a job. We are a bit different because we bid commercial only.
From contributor Q:
This is a real load of you know what! Do you price each cabinet individually as you quote? Who goes into a quote with the attitude that if I can scrape out a dime on the kitchen, I'll give him the dining room free? No one does. The disappointment is that you bid a $240K job and only got $150K of it. So what, take what you can get anytime.
I have been brought in on jobs where the cabinetmaker took a deposit, promised delivery, and let most of the time go by without delivering a stick. The faster I deliver, the more of the job I get. Is this unfair? On occasion I had previously bid the job and lost it to the cheaper guy. I don't jack up the price on what I do get at a later date, because by delivering for the quoted price and in a timely manner, I just became the prime contractor at my price on the next job.
If I bid a whole house and only get the kitchen, I am happy. If I only get a bathroom vanity or two, I'm still glad I got something and know that I had better take a look at my pricing schedule. Don't whine - be glad for the work you get, in any economy.
From contributor Y:
I don't think you know how lucky you are to have the work that you are getting. I am very busy also, but we can't get paid and may shut down because of it. You should just be thankful for the work and just flat out grateful the architect is even giving you the chance to do the project at all. What shocks me is the builder actually divided up the job as to who was cheaper. Most of the builders I work with just beat us to death.
From the original questioner:
That was a fun tread. Thanks! Although some of you misunderstood me. I said I was happy to get the job, to show our work to this new architect (most of our work comes from architects) - I've just never heard of this being done. I'll know how to handle this next time. In fact, because I didn't get the whole job, I was able to take on another project. In my experience something good seems to come out of every bad thing.
From contributor A:
We primarily used to work multimillion dollar residential. I would say without question that the majority of the cabinet work was not done by one company. Typically the kitchen is done by one company, the closets by another, and the millwork/built-ins/vanities by another.
Back in the good old days we would get a 500k contract to do everything, but that kind of changed about 10 years ago. I believe it was because of well known kitchen cabinet companies as well as closet companies like California Closets.
