Payment Strategies with Handyman
Posted on October 1, 2007 - Filed Under Business |
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"Surround yourself with the best people you can find, delegate authority, and don’t interfere as long as the policy you’ve decided upon is being carried out." — Ronald Reagan |
As discussed earlier, this renovation project was "pay by the hour".
It wasn’t until the project was nearing 70% completion that I realized this method was a huge mistake.
On the previous project, I used "pay by the job" for two reasons. The first was to ensure the best price was given. Second was leverage.
Best Price
Let’s pretend the objective is to install a ceiling fan. The "pay by the job" person quotes two hours. After two hours, the switch is thrown and it isn’t working. They spend the next six hours trouble-shooting the problem. In the end, only two hours are paid.
Pay by the hour charges for 8 hours and expects to get paid for 8 hours.
Two disparate methods. One clearly benefits the worker. One does not.
Leverage
"Pay by the job" can ask for a certain amount of money up front. From my experience, this is typically negotiated before a job starts. Thirty percent up front or 10 percent or 50 percent. There may or may not be a payment due at the 50% completion point. Typically the balance is due upon completion.
This works in favor for the owner because they can make sure that the hired job gets done, completed. Furthermore it ensures that the job is done correctly and with quality.
If the job is done to your satisfaction, there’s no reason to withhold payment.
Pay by the hour eliminates this leverage. If all the electrical sockets are to be replaced, and 90% of them are actually done, the worker can always say the last few sockets will be completed next week. And you never now if the worker will show up to finish the job or even if the quality of the work already completed was acceptable.
Fortunately most of the workers work on the principle of "pay by the job" which in turns gives the leverage over to the owner/manager/investor.
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3 Responses to “Payment Strategies with Handyman”
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Just make sure to keep track of these contractors no matter how you’re paying them. Remember that another one of The Gipper’s favorite quotes when negotiating with the Soviets was “doveryai, no proveryai - Trust, but verify.”
Well, at least your “learning experience” about paying hourly wasn’t as painful as mine. We had to fire our contractor and finish the job ourselves over the course of five months, on nights and weekends. And, while our enthusiasm for the job wasn’t sky high to begin with, it really waned as we plodded through. So, I would say the job took about two or three months longer than it had to because we dragged our feet. But, we broke even essentially instead of losing $15,000 on the contractor. However, we’ll never get those five months back. I learned some lessons there that will always be with me!
Engineer, the phrase “Trust but verify” will probably become common place in my dealings.
Trisha, When I mentioned this problem to a friend of mine she said “Well, this was a very expensive lesson for you.” She was right. It’s good we learn from our mistakes and can move forward. I just wish the mistakes weren’t so costly!