Consultant Michael Stone shares an exchange with a remodeler expressing concerns with pricing, estimates, and markup on Markup and Profit. The remodeler bids based on separate markups for new construction and remodeling, and the classification of jobs led him to bid based on the incorrect markup. Stone takes this specific example to extrapolate more broadly to pricing mistakes by remodelers and contractors.
Everyone, and I do mean everyone, who has ever compiled an estimate has made a math error that put knots in their stomach once it was realized. Until a contract has been signed, you aren't bound by a quote. Admit you made a mistake and revise the price. There's an excellent chance you'll lose the job, and that's why you don't want to make mistakes in the first place.
This isn't about keeping your word, it's about staying in business. Where is it written that you can't adjust a quote before you sign an agreement or contract? If you decide to stay with your original quote, you better have a tidy reserve built up because you're going to do this job at a loss and you'll need something to pay the bills.
You are in business to provide a service and make a profit doing it. You are not in business to build jobs, or drive around town giving out "free" estimates, or employ people. In order to provide that service and stay in business, you must price your jobs to cover all job costs, all overhead expenses, and make a fair profit. Everyone makes mistakes. When you find one, it's important to own it, be strong, and make the needed corrections.
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