Despermating: Still a thing

Written by on April 4, 2015 in Business Strategies, Contractor education with 25 Comments

Despermating on the Rise?

Back in July of 2009, I wrote an article about estimating in which I coined the term “despermating,” defined as the act of desperate estimating. The article was a tale of a competitive bidding situation in which my company’s price was twice as high as the next bidder on the project. At the time, desperate estimating was an annoyance. Now, three years later, it is all that and more…definitely more.
[To read Part One of “Despermating”, CLICK HERE.]

In ’09, despermating was more of a random occurrence – like a drive-by lowballer. Now it is more commonplace and compounded. Many contractors around the country who run respectable businesses, as opposed to trunk-slamming cash grabbers, have encountered competitive bidding situations on a more regular basis where another bidder will propose to complete the same scope of work for less money – sometimes even less than half the price of the legitimate business estimator.

Every consumer of every type of consumable good or service wants to believe in not just good prices but ridiculously screamin’ deals. All of our brains harbor that delusional little synaptic spark that allows us to hoodwink ourselves into believing, if only for a moment, that supply and demand or sheer desperation could drive the prices of ordinary, nonmega-volume big-box-type offerings to ridiculously low prices. This is complicated by the fact that certain types of stores and home TV shows have entirely skewed the perception of what painting is, completely blurring the line of which projects call for a homeowner to hire a pro. And no one, other than professional painting contractors themselves, is doing a thorough and steady job of making sure that consumers know what a professional paint contractor is – or at least the difference between a painter who is professional and a painter who is not.

“Every consumer of every type of consumable good or service wants to believe in not just good prices but ridiculously screamin’ deals.”

So, it is all this that has the consumers of our paint services searching for the deal. What used to be a simple “market check” is now a fascination…a quest. While in 2009, I (and probably you) would see the random 50 percent bidder, now it is more commonplace for me (and probably you) to have three or four of them stacked against me by a cagey builder, general contractor or homeowner in a competitive bidding situation.

Which leads the astute shopper to question you:

How is this possible?

How can you be twice as high as three other bidders estimating the exact same job?

Wouldn’t this make YOU the anomaly?

Don’t you need to get your pricing more in line with the current market condition?

Well, I generally don’t like to answer questions with questions, but this is one case where an exception is in order:

  • Who are the other bidders?
  • Do they have a demonstrated history in this type of work?
  • Do they have payrolled, skilled professional employees?
  • Do they carry workers’ compensation as well as liability insurance?
  • Do they have any professional credentials, accreditations or proof of any formal training?
  • Have they ever worked for you or anyone you know before?
  • If so, what do you know about the experience of working with them?

I am not sure about you or anyone else (including the waxing naïve customer), but in the world I have been living in for the past five years, neither my cost of living nor my costs of doing business have gone down. I am pretty sure that for most of us this is the case. But then it must also be the case that the despermators have figured out how to live a thrifty lifestyle from meal to meal and conduct business very inexpensively. Now I am all for frugality, but I think most professionals know the deal.

In case you don’t, just keep your ears open when you are standing in line at the paint store waiting for your stuff to get mixed and shaken. I heard a despermator on a paint store soapbox recently. While he acknowledged that there were other local bidders accusing him of driving the value of paint contracting down, his justification for it was that he shouldn’t be blamed for being faster, more efficient and a better estimator than the higher-priced bidders. That’s quite a spin. The old adage seems to ring true: quality, budget, schedule…pick two. A professional delivers all three, and they have to be aligned.

Perceptions can be twisted but reality never budges. I am of the belief that when despermators are involved, it is no longer competitive bidding. It is fantasy. And when a builder, general contractor or homeowner offers you the opportunity to match the low bidder and secure the work, it is pure condescension bordering on manipulation. So where do you put your energy? Not on those customers or that competition.

Where then? The first place to look is within. Every one of us has to make a decision in the presentation and marketing of our companies. The questions that drive our actions form the perception we have of our own businesses, and therefore the image we project to our customers and potential customers.

 In my opinion, one of the fundamental questions that drives the image of your business, and therefore the value behind your pricing, is: Are you providing a product, or are you providing a service?

I say service all day long. We don’t sell paint jobs. And if you do, you may be aligning yourself with the least qualified of our profession, which is where the despermators also live. Delivering a paint job is something that many homeowners can actually do themselves. Offering a convenient, clean, professional, courteous, friendly and desirable experience to customers on their own property in the least intrusive way possible is a service that cannot be faked. If your lowballing competition promises the same experience as you in order to appear more legitimate and more like you but then cannot deliver it, they only accelerate their own race to the bottom of the barrel. It takes a bit of time to earn a customer’s trust, and it can be lost so much faster.

“The key is not to engage in that race to the bottom.”

The key is not to engage in that race to the bottom. By pushing the bar for professionalism, the true pro paint contracting business only further exposes the inadequacies of anything less. It is not about paint jobs. It is about offering consumers something they can count on and believe in. This translates to something as simple as homeowners being comfortable with painters in their homes, whether they are at home or not. Our industry is not always recognized as the professional standard setter for home improvement trades, and that is unfortunate given that painting is one of the easiest and most popular home remodeling projects.

We can blame the big-box stores for making DIY projects so accessible to the masses, but paint has always been available for purchase by nonprofessionals. Big-box chains have only empowered those inclined to do projects. It is entirely possible that the pendulum swing in the past decade toward homeowner DIY projects has been driven more by the fact that consumers are confused by our industry.

Painting is a mature industry. It is not new or cutting edge. So, your job is to make it feel new and cutting edge. In a world where painters all pretty much look the same to consumers, this should not be all that difficult.

Good customers will pay more for better service and a more comfortable experience. Ironically, it does need to be pointed out that they are not actually paying “more.” The fact that your service costs more than that of a despermator does not lead to the conclusion that your pricing is high. If it is based on knowledge of your business costs and the goal of building a sustainable and profitable business, then they are just real numbers, not high. Losing projects to despermators is just part of the natural cycle of a service-based business. People will explore cheap alternatives, hoping to get lucky and find something just as good for half the money. Consider it a spectator sport.

The despermators will say just about anything in order to try to gain the confidence of the consumer. They will promise to deliver everything you deliver. Some even figure out that their low prices are not inspiring consumer confidence, so they swing it the other way and dabble in higher prices in order to win the “it’s expensive, so it must be good” vote. Even delusional consumers can see through that one. So, let the squirmy worm painters do their thing. Hold your professional line and keep raising the bar. Consumers have gotten quite a bit smarter over the past decade, and every time a despermator is hired to work for $0.50 on the dollar, it only means they have to hustle to get the next job even faster and cheaper until the nightmare is over.

There just aren’t enough Bob Seger tunes in the world to make that life feel good day after day.

Thoughts?

Scott Burt

Scott Burt is a contractor and freelance writer whose column "From the Field" has appeared in American Painting Contractor magazine (www.paintmag.com) since 2008. His writing and projects also appear in other print and digital venues. This site is an extension of Scott's publication work, and he encourages readers to leave comments and questions about articles published here. Hope to hear from you!

Latest posts by Scott Burt (see all)

Tags:

Subscribe

If you enjoyed this article, subscribe now to receive more just like it.

Subscribe via RSS Feed Connect on Instagram Connect on LinkedIn Connect on YouTube

25 Reader Comments

Trackback URL Comments RSS Feed

  1. Craig says:

    I’m late to this conversation, but demographics plays a huge role in the endeavour. When we first moved to this area, because my wife was relocated, I began charging $22/hr. To test the waters. Business was ok, so began increasing up to $32/hr. The year I began charging $32 I was out of work for 7 months. I was the most expensive guy in the area. So I began asking around. What were other charging. Most were at $20-$22/hr. I, foolishly went to $18/hr. Was flooded with work, but made $9,000 less that year, which raised flags with the income tax man. I’m now stuck at $24/hr. Once again. Recently did 2 jobs in the city closest to us, 80 miles away, and charged $45 per hour. No questions asked. That was the going rate and I was competitive with the “other guy’s”.
    I’d love to charge what I’m worth, but if I do that, I’ll be the stubborn one sitting at home not working. This is a place where everyone thinks a job at the local Michelin tire plant at $17/hr is your ticket to a successful life. You’ve made the big time there. Yet I just heard on the radio our local striking schoolteachers are making on average $270 per day. And I’m the one who charges way too much. Something has to change. Private business is the backbone of society.

  2. Nick says:

    We just sold a job for $3,200 to a GC and a guy came in at $1,700… I put a high emphasis on selling myself, and my trade knowledge. My price is what it is, take it or leave it. I never get upset when losing a bid. Clients who are strictly price shoppers are not who I target. The only thing worse than not making money because you didn’t get a job is not making money because you did.

  3. Lawrence Dillon says:

    A legitimate paint company who competes with a illegitimate desperator will compete his legitimate company out of business. Educate your potential customer. Service

  4. Nigel says:

    Scott,
    your usual trenchant post, thank you. I’m not sure how or where you find the time to write so extensively and eloquently, given the many other hats you wear!
    I think your points as usual are spot on; I would add one caveat however; much of the competition is incapable of bidding accurately because they have never learned how.
    Allow me to waffle; our industry has low or no barriers to entry so every Tom, Dick and Jane can call themselves a painter or painting contractor; most states offer no regulatory protection or enforcement of standards – even if they did the consumer would most likely be unaware of same. Thus, the ‘competition’ establishes an entry level price point or baseline bid in no relation to the actual cost of performing the work. You are correct to identify that even professional companies and estimators will sometimes cut their pricing substantially to win work – another term is ‘fear-based estimating’ and even the best of us can be guilty of shaving margins in an attempt to stay busy. My friend Paul Eldrenkamp of Byggmeister Associates recalled a remodeling peer who used a locked ‘sales discount’ cell in his Excel estimating spreadsheet that required the following password before he could open the cell to offer a discount; ‘screwing my wife and kids’. I couldn’t put it better.
    Over the past 6 years I’ve invested in a real time MBA by joining a CEO peer group, Vistage; member companies are in the tech, engineering, manufacturing and medical device fields. I’ve learned from my fellow members that each and every industry faces the same challenges of despermating and lowballing an estimate to win a sale. In this our industry is not unique though we like to think only we face such a treachery in the marketplace.
    It is up to us, the informed and thoughtful readers of APC and your column, to continue to educate the marketplace, one customer at a time.
    Kudos to you and APC and the PDCA for all efforts to elevate this conversation.
    Best,
    Nigel

    • Scott Burt says:

      Thanks Nigel, we are time managers, like you. I agree, having groups of people working together is the best way to improve industry conditions. I continue to be impressed by how many colleagues do believe that as well. You are right, despermating is happening in many industries, and ours is just extra plagued by the low cost of entry. By the way, we enjoyed having your painters in our classes in Medford last month. Thanks!

  5. Tim Raleigh says:

    “The difference between successful people and very successful people is that very successful people say “no” to almost everything.” – Warren Buffett

    I believe the same thing applies to business.

  6. Luckily through conversations with you, Scott and valuable insight from PDCA webinars and classes, I’ve become comfortable and able to communicate my value with ease. I feel fortunate to work in a primarily affluent community and operate on a word of mouth and referral basis only. I don’t generally have to worry about going up against hacks anymore as my reputation speaks for itself.

    I do occasionally come across low bidding competition and for the most part I’m able to walk the HO’s through the process asking them if they’re comparing the same proposals, insurance, etc…

    I’ve been called back several times to come in after a HO went with a low bid, to fix the problems. I’ve actually taken photos of the 1/3 or 1/2 the price results compared to the after photos completed by me. If someone is on the fence and can’t decide or just doesn’t know the difference between a crummy paint job and what a professional job should look like, I share those photos with them (of course without revealing the name of the hack company because putting others down doesn’t make you look good).

    As Warline Painting does a great job at this, it’s important for us to educate the client on what a proper paint job should be. There will always be those people that don’t care and just want a coat of paint thrown towards the general direction of the wall for next to nothing but I don’t want to do those kinds of jobs anyways.

    • Scott Burt says:

      Thanks Nichole, and very good points. I think we all (those of us who are good contractors) have gotten the call to come in and fix the lowballers work. Craziest one I ever saw was from a couple with a nice large home, who had hired the cheap painters, given a 50% deposit, and then went on vacation for a week while the exterior got painted. They came back, the painters were gone, and the house was half painted, and the wrong color – pink!! Fortunately, the painters were sloppy and left their empties behind. Would you believe me if I told you that it was interior paint from Wal Mart? Wow. That’s a costly way to learn the lesson that the low price is not the best deal. And I completely agree about Warline, they do a great job of educating!

    • Oisin says:

      You said it Nichole. If you do good work you will get a reputation for doing good work. Anyone with sense will recognise the value of a great finish that will look better, last longer and in the long run actually cost less! I’ll give you an example, I met with a new customer once that wanted the exterior of her home painted. My price to carry out the work was 30% more expensive than the guy she used the previous year and more expensive than the person she had used the year before that too. I explained that it might seem expensive now but you won’t need to get it painted again for at least 5 years! I guaranteed the work and 5 years later it’s still looking great.

  7. Ron Ramsden says:

    Scott, You hit the nail on the head. These words from a customer are all to familiar, “you price is almost double the other one we received”. At this point I suggest looking at apples for apples and bring up the insurance question. I admit I have adjusted my price in the past to keep the crews working but it seems to always come back to kick me in the but. We have found as you suggested to find clients who we want to work with and who want to work with us. It is amazing what happens when you change your focus to the preferred customer we like working with. Thank you for sharing

    • Scott Burt says:

      Thanks for commenting, Ron. It is all about educating the customer. If they get 3 estimates, and no one educates them, the only basis they can decide on is price. That is what keeps low ballers in motion. Uneducated customers.

  8. Scott Kesler says:

    Scott,
    I could not agree more, but allow me to illustrate…
    My company works exclusively doing interior finishing in NYC, mostly Manhattan. Recently I estimated a five bedroom apt. on the upper east side. The scope of work called for a level 5 skim coat on all walls and ceilings ( the project manager actually said level 6 ) – prime & 2 coats of Aura, (eggshell on the walls, flat ceiling except high-gloss in the living room) – 25 doors (shop primed) – 27 pre-existing windows (in good shape) – 4 existing built in wall units – 18 rad. covers plus all trim work. The skim coating and priming had to be finished with in 10 days so the floor finishers could start on schedule. My submitted bid broke down to $37,000.00 for the skim job & $53,000.00 for the general painting.
    When the company received my bid I was told that there were 6 other bids and mine was at the upper end end. I not holding my breath.
    Am I missing something?

    • Scott Burt says:

      I don’t think you’re missing anything! You know as well as I do that there will be bids submitted for less than half of yours. The builder will come back and give you the opportunity to lower your price. I call the bluff on that. If they value paint by price, they can receive the low priced experience. We all know how that ends, but it amazes me that builders will make that same mistake year after year. For us, a big strength is in saying no and walking away.

  9. Russ Pike says:

    We see it all the time here in the UK. With so much info available on the web nowadays, we are breeding an online presence of so called masters. To a potential client they can come across as knowledgeable and experienced as you and it’s not until the client is tempted by their offer and have them do the work and see the results, that the disappointment is realised. But how can we ever police it? Great post Scott

    • Scott Burt says:

      I hear ya, Russ. The best we can do is honestly educate the potential customers who contact us, and put out accurate and realistic info online so that when homeowners are researching, they will hear what real pros have to say. That is why I appreciate all the comments we get on this site. It is amazing how many readers see this content. Cheers!

  10. John says:

    I couldn’t agree more! We are in Orange County, Ca and my typical customer is willing to pay for quality and service. We charge fair prices and are an above the line company. However, we are often the higher priced bid and we are still told that they will pay the higher price because they felt most comfortable with us and that our walk through and estimate delivery was the most professional. The low bidders will always be struggling to get the next call and our phones ring off the hook. You can’t offer this type of service and quality at the low price point…

  11. Dan says:

    Hey Scott, Elegantly stated per usual with your writings. We have put so much energy and effort into this conversation about pricing, costs, and bidding, that at times my head is spinning. The only correct “price” for a job is your costs, that your business, with your painters, and your vendors generate! There is such a wide range of paint, dare I say, services and quality out there today that it’s mind boggling. Stick to your business plan with what you want to charge and go after it!

Leave a Reply

Your email address will not be published. Required fields are marked *

Share your photos!

Top