A prospect, referred to me by a client, requested a whole house tech proposal for a new house he’s building. After some discussion, I sent him a high level proposal (including scope description and approx budget) for audio, video, lighting, HVAC, WiFi, etc. He got back to me pretty quickly to say this exceeded his budget and he would circle back with thoughts on how to “narrow in on pricing.”

Five months later, he emails me a half dozen files and asks me what I think. The files are a mixture of marked up pdfs and ad hoc Word and Excel docs. Basically, a mishmash of information, which I’m guessing is a dump of his brain after having conferred with several custom integrators.

I’m guessing that it would take two hours minimum to get from this mishmash to a coherent scope doc, and then another two hours to create and iterate over a final proposal, which he will likely use to facilitate the request for other bids.

My thought is to tell him that the next step is to produce a coherent scope doc, which I can do for him at my hourly consulting rate. This would cover me in the event that he was just picking my brain to solicit other bids, and it would also filter him out if he is the sort not to value my time.

The downside is that I may be reading the situation wrong, and I risk putting him off by saying it will cost him to move forward with me.

Thoughts?

I'd suggest to him that he define what the price is, and what the scope of work he wants is, and determine from there whether that's something you want to pursue.

You've already established in his eyes that proposals have no value monetarily by doing one for no charge.

He thinks he already defined the scope. That’s the problem.

Either he doesn’t understand what defining the scope means or else he is playing dumb so that I will fill in the gaps. And I don’t know for sure which it is, which is the other problem.

If you're a professional, it should cost him to move forward with you regardless if he goes with you or not.

If he does, credit that cost toward the project.

Send him a nice/short note with a contract and invoice for 20 hours of consultation time. He already got free labor from you once. Don't let him do it again.

You should have determined what his budget was before doing anything.

Then you should have charged him a design fee. It's fine to present a "free" quote if the design has already been done by someone and you're able to work off of a set of plans and spec's. But don't provide the plans and spec's for free. Ever.

Send him a copy of a scope/design that you have generated for a project of similar size, and explain to him that the same thing needs to be generated for his project, and that that is going to cost him whatever you feel you can bill for it.

People do not understand the complexity of a properly designed system until you show it to them. A lot of people also have a hard time understanding why they should have to pay for a “bid”, because they don’t understand that what you have to do to get to a final number is create a full system design, and on a complex system like this sounds like it is, that takes time.

One of the things that took me the longest time to get comfortable with was never leaving a first meeting with a client without a rough understanding of the scope and an agreement of what the ballpark cost of that was going to be. I would love to get to the point where I am also collecting a design retainer on every project at the end of that first meeting, but it is very rare that if I leave that first meeting feeling like the prospect and I are on the same page and that we are a good fit for what they want that we don’t actually close the job after I generate the proposal anyway.

I don't understand when people say they 'credit the cost' towards the project.  Why do this and give your hard work away for free?

If you are a professional, charge for your design time period!

It's that transitioning from the old ways.

We (as an industry) use to do all of the initial work for free. Relying on the profit of the equipment & part sales to fill the coffers.

Then when equipment & parts profits dwindled, we had to learn to charge for all our time, change orders, etc. But we still gave a lot of our time away for free.

Now in this penny pinching age, we make cost+ on equipment & parts (razor thin margins). And we have to get every second of our time paid for - both on & off site. And we have to make efficient use of that time or else the other company is going to beat us on labor time. It has become a very difficult industry to make money in (as if it wasn't tough enough before).

The only saving grace, is all the idiots out there doing things wrong and screwing up. And having lots of recuse clients you can refer new client to, as proof of your own greatness. Allowing you to charge what needs to be charged to make a living and get the job done right.
And the customers that only care about price.... f^em! They are ALWAYS going to cost you more in the end. They do NOT want you to make money.... f^em! Let them slither in their crap! "I don't have to hear or see it from my house."

Fair enough, I stand corrected.

Cost plus...in residential?.....really? So you are selling consumer electronics at say 10-15% over your dealer cost? Not sure who could push you into that, unless all of your local competition is selling below MAP. Even on good, but non esoteric brands, Best Buy and Amazon are controlled by MAP pricing. Why would our industry provide clients with near cost pricing, when average folk need to pay retail at Best Buy?

At one point we were courting large condo and tract projects. We held open houses and called on developers, but in the end they were too smart for us. After we had a good prospect, the prospect would contact the manufacturer directly and the local rep would give a better "direct" deal.

It is interesting that the manufacturer never gained much traction in the area, probably because we quickly got smart and the rep was not so great at developing his own leads.

'Dealer cost' and what things are selling for everywhere, is nearly the same things these days (let's exclude the very few protected brands that are left for a minute). The vast majority of the items we put into projects, fall into that category. Anyone can purchase the items for the same price I pay for them.

With these items (which make up most of the items in a project these days), I always mark it up 10-15% above what I pay and then have to explain my 'concierge' fee to the customer. If they don't like it, they can purchase the items themselves and I explain diligently, I have no responsibility for their stuff!

Now, to the heart of your point. No, I do not sell things for just over 10-15% cost that I do not have to. But this only covers 2 categories = 1) Protected lines that have good dealer markup and can not be easily found for less. 2) Obscure items that are difficult to find and get pricing on.

There is a 3rd component to this pricing, when another dealer is discounting to win a job. I do not run into this often (rarely ever) but when I do, I do NOT discount. My price is my price and I explain to the customer that if the other dealer is cutting his prices to win the job, he may not be around later to support it. "And you WILL need support on electronic systems eventually".

Thanks for the input.

To clarify, the prospect never received a system design. The "high level proposal" I sent him went through each application of interest and provided pricing guidance.

For example, he expressed interest in automating all lighting. I told him that based on the lighting plan, it would cost him around $X for a distributed system and around $Y for a panelized system, and I explained the tradeoffs between the two. The pricing guidance was based on a count of the circuits in the plan. I also explained how scaling back lighting would impact the cost.

We also established that he wanted music in a dozen rooms; wanted architectural speakers; and, didn't need to "rock the house." I told him the budget for that scope and explained the price jump from 8 to 9 zones.

And so on.

Generally, I don't believe it's reasonable to ask the client what their budget is until they know what the price/scope curve looks like. The info I sent him laid out that curve.

I agree at this point a good next step is to ask him what his budget is.

Do you want to work with us?

"Yes"
To design your system, It will take me x hours, and a fee of $$$

"Not sure yet, I need more numbers"
We've established this is $ and that is $ so your budget will be $$.
Are you comfortable with that budget?

"Yes"
To design your system.....

"No."
What budget is your target....

$$
To design your system.....