Q&A: Profit Hidden vs. Shown in Bid

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