You stated there's an incentive for you to finish the work either way. But then you went on to say that there's more PROFIT for you when the project runs longer than expected. Sounds like a contraction. If the project takes MORE time, there's more overhead, and you will increase the amount of profit. You are not necessarily charging a higher rate, but the total cost does increase. You have not explained in any way what your incentive is for keeping on track and on budget.
The incentive for us is to keep clients happy and make sure we get a referral at the end of the project. Unhappy clients hurt the business. Financially, it's actually better if projects do not take longer than expected. Sure, we make money while our carpenters are working but we also need to make sure we make our markup on subs and materials. If jobs take longer than expected then we're not making the markup within the time we expected which means we're losing money.
@@Theconsciousbuilder Hi. Thanks for the feedback. My agent told me something similar as well. The issue is really different, IMHO, than if there is an incentive. It's about how to manage the risk. Tell me what the customer is supposed to do when he gets an unexpected up-charge at the end of the project. If he does not pay it, no house. 2nd thing is from you POV, you have an excuse you can use - the sub's cost more than expected. To which there is no recovery for the customer. And the subs know that. If you have a way to teach the customers watching you HOW they can mitigate the risk, that would be wonderful video. The last thing I want to ask is why not do fixed price contracts only. You are not accepting the risk, the buyer accepts all of the risk. How is that fair?
Great detailed explanation. Thanks
Glad it helped!
Hello Casey, van you suggest a cost plus Contract model to use?
Hi Henry, that is definitely something for us to consider offering, in the meantime you can find lots of examples online. Thanks for watching!
Do you disclose your cost-plus fee? Say 20%. Do you tell the customer you are charging them 20%?
Thanks :)
Hi Cody, we sure do! We have our labour rates and then the markup on materials, subs and deliveries. The larger the project, the smaller the markup.
Great video 👍. Thank you very much for your help
You stated there's an incentive for you to finish the work either way. But then you went on to say that there's more PROFIT for you when the project runs longer than expected. Sounds like a contraction. If the project takes MORE time, there's more overhead, and you will increase the amount of profit. You are not necessarily charging a higher rate, but the total cost does increase. You have not explained in any way what your incentive is for keeping on track and on budget.
The incentive for us is to keep clients happy and make sure we get a referral at the end of the project. Unhappy clients hurt the business. Financially, it's actually better if projects do not take longer than expected. Sure, we make money while our carpenters are working but we also need to make sure we make our markup on subs and materials. If jobs take longer than expected then we're not making the markup within the time we expected which means we're losing money.
@@Theconsciousbuilder Hi. Thanks for the feedback. My agent told me something similar as well. The issue is really different, IMHO, than if there is an incentive. It's about how to manage the risk. Tell me what the customer is supposed to do when he gets an unexpected up-charge at the end of the project. If he does not pay it, no house. 2nd thing is from you POV, you have an excuse you can use - the sub's cost more than expected. To which there is no recovery for the customer. And the subs know that. If you have a way to teach the customers watching you HOW they can mitigate the risk, that would be wonderful video. The last thing I want to ask is why not do fixed price contracts only. You are not accepting the risk, the buyer accepts all of the risk. How is that fair?