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How much money down do you ask for before scheduling, beginning a project?

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Forum topic by 1thumb posted 07-30-2018 01:29 PM 2762 views 0 times favorited 18 replies Add to Favorites Watch
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1thumb

89 posts in 2276 days


07-30-2018 01:29 PM

Not asking about $10k custom pieces, but built-ins, cabinets, custom closets, etc. in the $2-5k range.


18 replies so far

View RobHannon's profile

RobHannon

145 posts in 650 days


#1 posted 07-30-2018 01:37 PM

As a hobbyist I try to get my materials covered. If I were doing this for a living I suspect I would have to got to a hard percentage of the total, but I also would probably be charging more for my time and have better prices on materials so it should still get close to covering materials.

View JCamp's profile

JCamp

797 posts in 670 days


#2 posted 07-30-2018 01:37 PM

I’ve never been the contractor but I have hired a few. Generally they get 50% up front, 25% half way through and the final 25% at the end. I’ve dealt with 3 different guys and they all do this, and they are all well respected contractors. Its my assumption that the 50% up front covers nearly all the material cost. The 25% in the middle covers any labor (likely for the whole job) so that they don’t get screwed if the customer doesn’t pay the final bill. And the final 25% is profit. Its worth noting that my projects were all “construction” stuff like decks, siding, buildings and those went up to $12k not just the 5000 that you mentioned. The bigger the job, such as a house or garage, would likely require more payments. Also a really fast job may require less.
Sad to say but its really a “cover your butt” thing. If someone isn’t happy with the finished product then they can refuse to pay and may not allow you back in to retrieve what you built so you should allow yourself enough money to at least not go in debt doing it if you don’t get that last payment. Also some ppl are just turds like the folks that throw a fit at restaurants and make a big show just to get a free meal.

-- Whatsoever thy hand findeth to do, do it with all thy might

View BroncoBrian's profile

BroncoBrian

756 posts in 2078 days


#3 posted 07-30-2018 02:10 PM

NEVER get yourself upside down on a project. Everyone is nice until they are not. I was a contractor for a long time and I made sure we were always ahead on parts and labor. Leaving 10% for the last payment is fair and should be enough incentive for you to complete a punch out list. Offering them a chance to create a punch list (even when you know it won’t exist) is enough to build some trust and keep your customer at ease.

Getting contractors to finish a project is difficult. So making them know that you expect to give them a few days to make sure everything is as epic as they expected, then asking for your final payment to be paid within 5 business days keeps both of you happy.

I think the best service comes from charging enough to solve problems. If you are short on material or mess something up, or they cause a change, you are better off have a margin available to fix it without having to defensive or send change orders.

Edit: There is a reason high-end services and get referrals and those businesses grow. They can afford to impress people and leave the best impressions.

-- I'd like to see a forklift lift a crate of forks. It'd be so damn literal!

View jonah's profile

jonah

1838 posts in 3418 days


#4 posted 07-30-2018 02:21 PM

Whatever you decide, I’d definitely put it in writing. Even a very simple, typed contract that spells out exactly what you’ll be doing, the time frame, and the payment schedule is incredibly useful. Make it look professional. Pro tip: you don’t need a lawyer to write and execute a contract. Just be very clear about what each party is supposed to do.

View msinc's profile

msinc

499 posts in 623 days


#5 posted 07-30-2018 04:16 PM

If you are going to build something and then install it you had best be getting ALL the money for the build up front, no exceptions. E.g., a custom bathroom vanity that you charge $3000 for and another $500 to do the install would require $1500 to get started, the other $1500 when the vanity is complete and STILL IN YOUR POSSESSION and $250 to start the install. The final $250 is due when you get it in the house and are finished. Any customers that balk at this “way of doing business” needs to be politely dismissed. Many guys wont do it though and what you really need to be considering is the difference between losing business {what it seems like to dismiss a customer} and losing money. The simple fact is that if Mr. Customer is not going to pay you anyway where is the loss??? I throw in the “no exceptions” because friends and family are the most likely to stick you.

View JAAune's profile

JAAune

1826 posts in 2437 days


#6 posted 07-30-2018 07:32 PM

For that type of project, it’s usually 50% down and 50% upon completion but it also depends upon how expensive the material cost is.

But I also do a lot of commercial work and those jobs usually don’t pay until after delivery. Commercial jobs can pay well but you need to have your shop and finances in order to swallow the up front cost of a project.

-- See my work at http://remmertstudios.com and http://altaredesign.com

View Jack Lewis's profile

Jack Lewis

320 posts in 1198 days


#7 posted 07-30-2018 08:05 PM



Whatever you decide, I d definitely put it in writing. Even a very simple, typed contract that spells out exactly what you ll be doing, the time frame, and the payment schedule is incredibly useful. Make it look professional. Pro tip: you don t need a lawyer to write and execute a contract. Just be very clear about what each party is supposed to do.

- jonah


X2 on what Jonah said. A verbal contract isn’t worth the paper it is written on!! Make sure you include legal fee conditions if needed to collect must go to court.

-- "PLUMBER'S BUTT! Get over it, everybody has one"

View 1thumb's profile

1thumb

89 posts in 2276 days


#8 posted 07-30-2018 10:58 PM

Thanks everyone. It’s a damn shame, but as someone posted, ‘everybody’s nice until they’re not.’ Keep up the good work

View 1thumb's profile

1thumb

89 posts in 2276 days


#9 posted 07-31-2018 12:18 AM

Quick follow up: I live in a large metropolitan area and have been picking up mucho work from recommendations on the neighboorhood Nextdoor app. Part of town I live in is going thru a lot of growth/gentrification. I feel a little more at ease dealing w/clients from this source, and the commute is great. Good source for work

View msinc's profile

msinc

499 posts in 623 days


#10 posted 07-31-2018 01:11 AM

If there is really that much work in the area you should have no problem getting paid up front. As someone else already posted, once you do a job and install it you cannot go back and take the thing you did back out. It’s theirs whether they pay you or not. All it takes is one good time of getting really stuck for some serious time and money and you will wish you had followed my first post. Ask me how I know…..

View Rich's profile

Rich

3547 posts in 709 days


#11 posted 07-31-2018 01:41 AM

Someone keeps mentioning building and installing. Be sure to check your local rules and regulations regarding licensing and insurance before you do any installs. Since you say you live in a large metropolitan area, you might also check to see if there are any union restrictions to you doing the installing. Those are folks you do not want to cross.

I build ‘em, but I don’t install them. It saves me a ton of grief.

-- Half of what we read or hear about finishing is right. We just don’t know which half! — Bob Flexner

View woodbutcherbynight's profile

woodbutcherbynight

5545 posts in 2529 days


#12 posted 07-31-2018 02:06 AM

I agree with Rich. I will build it, you get it installed and to pick it up requires the last 50%. No payments etc etc. I do the rare customer pay build but I do not start until the 50% is down in cash in my hand.

-- Live to tell the stories, they sound better that way.

View 1thumb's profile

1thumb

89 posts in 2276 days


#13 posted 07-31-2018 02:16 AM

I don’t have a problem, msinc, usually ask for 50% just asking what others do.

No unions to speak off.

I don’t necessarily like to install, myself. But for a couple of buit ins, custom closet, etc. I’ll do it. I pay myself well for the effort. I’m a valued employee.

View CWWoodworking's profile

CWWoodworking

83 posts in 299 days


#14 posted 09-08-2018 02:22 AM

One of the reasons I went 100% wholesale.

I dont ask for a dime. If I have problems with payment, I dont sell them. Easy peasy. I have only had 1 issue with a store not sending check. I pushed a little, and they gave me a CC to keep on file. No more problems.

Be it retail or wholesale, I would get a Square and raise your prices to accomidate. CC make it easy. The 3% is worth it.

I cant tell you how many thousands of dollars I have “up sold” because I have square. Especially if you deal with women a lot.

View Rich's profile

Rich

3547 posts in 709 days


#15 posted 09-08-2018 02:41 AM


One of the reasons I went 100% wholesale.

I dont ask for a dime. If I have problems with payment, I dont sell them. Easy peasy. I have only had 1 issue with a store not sending check. I pushed a little, and they gave me a CC to keep on file. No more problems.

Be it retail or wholesale, I would get a Square and raise your prices to accomidate. CC make it easy. The 3% is worth it.

I cant tell you how many thousands of dollars I have “up sold” because I have square. Especially if you deal with women a lot.

- CWWoodworking

What are you selling? I do agree about taking cards. I use PayPal just because I’ve had an account for years and the chip/strip reader was free. No better or worse than Square.

-- Half of what we read or hear about finishing is right. We just don’t know which half! — Bob Flexner

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