I’m pretty sure that most, if not all self employed people have under priced a job at some point in their career including myself as a landscape gardener and it leaves us feeling anxious about what we can do in this situation. I mean, do we speak to the customer? Do we continue with the work and use the underpiced quote as a learning curve? Or like some, do we simply run away? Of course, we should stay away from running away from a job, but everyone’s circumstances are different. First let’s talk about a quote that I underpriced and what I done before exploring all of the possibilities and consequences that come with them.
My underpriced quote
As a landscape gardener, I admit that even to this day I’m underpricing jobs when giving my quotes but with experience, these underpriced jobs are only out by a day or 2 and the books still look healthy at the end of the year. But my biggest learning curve was actually my first ever quote provided for a landscaping job which included 20 squared meters of paving along with 20 squared meters of new turf. To this day, I can not understand how I got it so wrong, or what I was thinking when I gave the quote!
I remember receiving a phone call asking if I offer landscaping services as she was getting 3 quotes ready, to which I was happy to be giving one of the quotes. I was happy to be doing something other than garden maintenance since starting my new business! I arrived the next Morning and took measurements of everything, and stupidly asked if she would like me to provide a quotation for the labor whilst I was there! I literally said:
“That paving won’t take me long, I’d say 3 days to lay the paving slabs and an extra 2 days to lay the turf – I charge £160 per day, per person, which equates to £1500 for 2 of us”
I thought it strange how happy she was as she confirmed that she would speak to her husband when he gets home from work and give me a call in the evening to let me know their decision, and just a couple of hours later she did just that! I agreed to start the following week.
Well the following week comes and there I am, on time with Dylan who was working for me at the time. I was paying him £100 per day, so I would be making £220 per day for myself. At least that’s what I thought. The lady’s husband was there and the first thing he said to me was:
“My wife and I were speaking last night and it’s funny because we wasn’t sure that you would turn up”
Why didn’t I see this as a sign? I naively thought that the other quotes they received to complete the job must have been really expensive and why couldn’t everyone be fair like me! To be fair, I was young at the time!
Anyway, on day 1, the day that I thought I would be laying the majority of the paving slabs, I hadn’t even finished preparing the ground ready for the patio to be layed. This actually took us 2-3 days to complete which included digging the area out by hand and laying type 1 MOT before using a wacker plate to compact it. At this point I thought, OK, clearly I have underpriced this job but as long as it only goes a couple of days over then I would still be quids in! But this would not be the case.
The paving slabs took a lot longer to lay than expected due to awkward cuts needed to go around a pond that I wasn’t experienced in doing. The paving slabs actually took around 6-7 days including the grouting to complete. This meant that I was 8-10 days into the work and I hadn’t even started laying the turf yet. So here I was, 2 weeks into an underpriced 5 day quote and having paid out £1000 in wages to Dylan on a job that only paid £1600. The turf still needed completing, Dylan still needed paying for upcoming days and the money I would make completing this job was slipping away from me.
Everything that could go wrong did go wrong. The ground had to be raised quite a lot for the turf to be laid which meant that this took 3 days to lay. So in total, I had paid out £1300 in wages to Dylan, and made £300 for myself over 2.5 weeks, minus the fuel of course! It was a learning curve that almost had me quit gardening as soon as it began!
Looking back, I am glad that I stuck it out and continued to complete the work despite being stressed and very nearly running out of money! I took it as a learning curve to never give a quote on the spot at a risk of wanting to please the customer when face to face and underpricing the job. Luckily I bounced back and no bills went unpaid!
What you should do if give an underpriced quote
Accept that you have underpriced the work and complete it anyway
Providing that the work isn’t going to bankrupt you or stop you from paying the bills or feeding your children then this is a very possible solution. Like the job I completed above, I decided to complete the work and never let it be known to the customer that I was upset about the price, although they obviously knew! Just take it as a learning curve and move forward, letting it better you and your business for the future.
Speak to your customer
Although this is the best thing to do, it is easier said than done as it’s not nice for anyone to discuss money, especially if you are telling a customer that you need more money. Even now I don’t like doing it! But this is absolutely the first point of action that you should do, and remember that you aren’t demanding more money, you are simply asking. If your customer says no, then you can accept the loss, finish the job as quickly as possible and use it as a learning curve.
If you think about it, it’s not as bad as it sounds. It’s just a conversation to explain that you have used more materials than you had estimated or that the work is taking longer than expected, and would it be a possibility to increase the price slightly. You could even explain that you feel terrible and offer to work the extra days at ‘mates rates’. Yes you may feel embarrassed, but the chances of the customer thinking any less of you are pretty slim and you may be pleasantly surprised with their answer. The worst that they can say is ‘I’m really sorry but I just don’t have the money to pay any more’ and that’s it!
Run away from the job
This is definitely not something I would recommend, rather something I will try to put you off from doing and the reasons why. I understand that for some of you, this may seem like the only option. Especially if you have been paid upfront for a job and have completely ran out of money, which means that you can’t even purchase the materials to finish the job if you need more than expected, but running away from a job is just not the right thing to do!
If you simply walk away from a job due to underpricing a quote and all of the money has already been spent, then you risk your customer taking court action against you. They will try to reclaim all of the money given to you, as well as the cost to complete the work that you were unable to finish. Combine this with court fees and you will surely be in a worse place than you are now. To top it off your business will likely receive negative reviews and a bad reputation, making it very difficult to continue earning a living. You need to treat your business like a baby, nurturing it and allowing it to grow.
If no money has been given to you for labor and you are thinking about walking away from a job half way through completing it, you may be thinking that if you run away now then the customer has got a good deal. Work for free. But this simply isn’t the case since you have likely left the customer with a messy garden or home and if your quote truly is underpriced, then they may not have the budget required to put it right. In other words, they may have never gone ahead with any work if it wasn’t for your underpriced quote, an argument that could be said in court. It’s just not worth the risk or the sleepless nights that you will have there after.
Like above, the best thing to do is have a conversation with the customer as communication is key. You will get a lot more respect compared to just giving up! Explain your situation. Let your customer know your circumstances.
If you have been paid upfront for a job and ran out of money…
Always avoid being paid upfront for uncompleted work, at least for labor. This way you can ask for an advance on labor costs to pay for materials should they go over. If how ever you have already been paid upfront and ran out of money, then the only option is for the customer to give more money. At the very least, explain that you are really sorry and that you aren’t asking for extra money for labor, just for materials (unless you want to of course) and that you can’t complete the work otherwise. Offer to give receipts for all materials purchased to show that you are being genuine. They can’t expect you to complete the work if they refuse to pay for materials and you will have a better night sleep compared to just running away!
Although unlikely, if your customer is truly unhappy about the extra costs involved then offer to do some additional work with little to no labor costs to settle the difference and failure in that, then to promise to knock the materials from the labor costs with any future work you do. Remember, the majority of customers would fully understand and even be willing to pay the extra labor, this is just an example of a worst case scenario! Don’t run away and risk your hole business when just a 1 minute chat could have solved everything!
I have ran out of money for materials and the customer isn’t paying until the work has been completed…
This is a lot easier compared to being paid upfront for a job, since you only need to ask for some of the labor money in advance to purchase materials. It would be hard to find a customer that wouldn’t be happy with that! If they aren’t happy for any reason, then offer them to buy the materials with the money and to keep the receipts, allowing you to off set it against the balance once all work has been completed.
How to avoid underpricing a job in the future
The first point I would like to make is that there is a difference between a ‘quote’ and an ‘estimate’. A quote is referred to as a fixed price, something that whether a job takes 1 day or 100 days, whether materials costs £10 or £1000, the quotation will remain at a fixed price. The benefits of offering a fixed quote is that you will likely gain more customers, since everyone wants to know what they are paying. The problem is that you will take on the risk as if things go wrong then you will be liable make up the difference.
If giving an estimate for a job, then there is no fixed price in place. For example, you could say that your day rate is £150 and that you estimate the work to take 5 days, totaling £750. You estimate materials to be £250 and therefore the hole job is estimated to come to a total of £1000. This is by far the safest option to go for and depending on the work and customer, I have provided estimates many times. Just make sure that you put everything in email and explain that although rare, to be prepared should labor or materials go up in price due to unforeseen circumstances and have a contract ready to sign before starting any work.
When I give quotes, I will quote the labor but explain in the emails that the materials are estimated. This way if work takes longer than expected then I will work it, but if materials are higher than expected then the customer will need to pay for these. If a customer expects me to pay for materials that go over then it’s not a customer that I personally would like to work for as it doesn’t seem fair to me, especially if I am guaranteeing the labor.
If you are providing a fixed quote then make sure you add more for time and materials to cover yourself should things go wrong. I would prefer to pay more and know what I am paying than to have a lower estimate and have no idea what the cost of work actually comes to!
To conclude…
When underpricing a job you are not alone! It happens to the best of us and is just part of the learning curve when starting or running your own business. It happens. Customer’s see nothing wrong with kicking someone off from a job if they aren’t happy with the work, but that doesn’t mean it’s OK to walk away from a job because you are unhappy with the customer since you will be leaving their home in a worse condition to how you found it. In all cases, the best solution is to have a conversation as the worse case scenario leaves you no worse than you already are. Failure in this, you can always continue the work and use the underpriced quote to learn from. Never run away from a job, at least without having a conversation about your circumstances first! This way it wouldn’t be ‘running away’, more unable to continue the work and letting the customer know. Of course this still comes with risks however! We are all human. That includes you and your customer. There is a good chance that they will understand!
Everything I have wrote above about underpricing a quote are all opinion based. Please don’t take what I write as facts or legal advice. Should you have any questions or would like to share your story then please comment below! Otherwise, please remember to subscribe!