- Q. When presenting an estimate, do you show your overhead and profit numbers to clients? Please explain why or why not.
A. “It depends on the type of contract. I like cost-plus-fixed-fee deals, and in that case the client sees my numbers. But if it’s a fixed bid, I don’t show them.”
— Byron Papa
“I show overhead and profit as an operating expense, but I burden my labor so my gross profit number is lower. I show this to design-build clients who need this information to feel comfortable with our pricing. It has rarely been a problem.”
— Peter Feinmann
“We show these numbers only on time and materials work. Most people don’t expect to see profit from you any more than they do when buying a car or furniture, or when paying a doctor for surgery.”
— Mike Weiss
“I never disclose any of my costs to clients, except for a special-order item. When you buy a new car, do you get a breakdown of overhead and profit? No, you just get a list of options with corresponding prices. That’s what I do — a price for the basic project and a list of options.”
— Steve Klitsch
“I will often share my numbers with a prospective client, but only after I have a gut feeling that they are sincere and not shopping. I’ve always felt that honesty is the best policy. I don’t like to hide the numbers and I don’t have a problem telling clients what I need to charge to stay in business.”
— Bill Medina
“No, because the high percentage of markup necessary in residential remodeling only produces a red flag with the homeowner. The alternative — artificially inflating line items to reduce overhead and profit percentages — isn’t very sound business either.”
— Bill Gaver
“I usually submit a schedule of values that adequately substantiates costs without showing overhead and profit. It would be just one more thing for them to obsess over and get anxious about. Instead, I rely on good marketing and my sales package to make them confident that they’re getting their money’s worth.”
— Sue Cosentini
“I don’t show these costs, although occasionally I’ll explain for every two hours I’m on the job, I spend one hour on paperwork and upkeep. I don’t dicker over the price either, unless the client wants ideas for legitimate changes to bring down the cost.”
— Rick Stacy
“I focus on what they are getting instead of the insurance, taxes, bookkeeping, and other stuff that they never see.”
— Howard Ferree
Q&A: Profit Hidden vs. Shown in Bid
"For this article, we asked a dozen successful builders and remodelers from around the country to share their opinions on some of the business questions our readers ask most frequently. Here’s what they told us."
2 MIN READ