Managing Customer Indecision

      Here's a nice discussion of interpersonal techniques and contract language that keep a customer's inability to make a timely decision from damaging your bottom line. October 2, 2007

Question
You've all had, if you've been in business very long, that customer that can't make up his mind - change after change. I took a deposit from a customer building a house two months, assuming most of the decisions were done. Luckily, I dragged my feet ordering a few things. He still hasn't made some necessary decisions to be able to move forward. His house is almost ready for cabinets, but we're still going to be another four to six weeks. While he certainly understands his indecisions are why we'll be late, I can already see him calling in three weeks, "You guys almost done yet?"

How do you handle customers that make an abnormal amount of changes? I probably have a week's worth of labor just in making changes. Obviously, one reason to go custom is you can do what you want, and changes are expected, but at what point do you draw the line?

Forum Responses
(Cabinetmaking Forum)
From contributor D:
Have it written in your contract about changes needing to be made in writing and that additional charges may be necessary. That way you can make a few changes, and then when it starts to get out of hand say, "any more changes and I need to start charging change order fees." If someone knows it's going to cost them, they start making up their mind. I know some people will do the final drawings and send them to clients - any changes (other than clarifications or mistakes) to those incur additional fees. You have to strike a balance between good customer service and getting screwed. And don't forget to get changes documented - if they change their minds a lot, they might have a tendency to forget which one of their changes they actually decided upon.



From contributor P:
Definitely get the changes in writing. I use a simple change-order form that I give them to sign. I don't mind making changes, as long as it's something that hasn't already been built. Part of our appeal is that a customer can change something that they wouldn't be able to had they gone with a semi-custom installer. Some people can drive you to drink, though....


From contributor J:
Or worse, they can make you think ugly thoughts. Have one now that I started the design portion on 5/03/07. Last week the guy is gone, but his spouse is there. I bring the face frames in to make any scribe adjustments prior to attaching them and to give the spouse a chance to see the layout one final time before I get busy staining and sealing the frames (everything else was ready). Of course, the changes are numerous. This was on last Thursday. He called me today wanting to know where I was and where his cabinets were. Really gave me the what for. Sure wish I could add a dozen doors, a couple of cabinets, as many drawers and drawer fronts. Stain and finish them all and have them installed last Friday. (Day of original install.) Anyway, after explaining myself, all was well. Guess what I'm trying to say is that communication is the key. No matter what you think your customer is going to say, let them say it to you. Just be prepared with the facts. Believe it or not, weather is a factor. Material availability is a factor. Change orders are a factor. Personal time is a factor. Construction time is a factor.


From contributor E:
I long ago realized the value of including additional time as well as expense to my change orders. Once they are signed, I try to email them a new deadline so they understand this completely. I began this when I was building a contract that had a performance clause and it worked so well I never stopped.


From the original questioner:
I do have a standard note in my contract about change orders, and charging appropriately. We did start building the kitchen cabinets, and apparently he got a good deal on a 48" wide refrigerator instead of the 36" he was going to buy, so those surrounding cabinets are now going in the garage. He is paying for those - so much for the good deal he got. I guess it's just easier to charge more money when it's a physical part of the equation. The hard part is convincing myself that not getting paid for my extra time is also money out of my pocket.


From contributor W:
Unless I'm reading the question wrong, he's also asking about people who won't make needed choices or decisions on time. Assuming there's a documented completion date, the thing to do is also document the "needed decision" dates, and include language that states delays on required decisions will automatically extend the completion date by the amount of time the decision is late.

If you're waiting on a decision, when you finally do get it, be sure to send a note mentioning the revised completion date (otherwise, even though you're covered, you'll still have a PO'd customer).

Stay in their face (politely) on this. Each time you send a note about extending the completion date, it will help make them feel the responsibility. The same holds true for change orders. *Always* include the revised total price when documenting a change. Documenting just the cost of the change doesn't remind them of how the change affects the overall cost of the job. At each change, they've got to look the total in the face, and believe me, it does away with a lot of carping about the price at the time of final payment.

One other note... There's a fine line between being a total hardass and treating customers well. The method I like is to explain at the beginning that changes will mean change orders, and that there is a $95 administration fee, regardless of the cost of the change. Explain that the admin fee is to cover the paperwork you have to revise (schedule, total cost, etc.). After using the stick, then I use the carrot, and say that I'll waive the admin fee on the first two changes (making sure that I've included $190 bucks in my price to cover those two). This allows you to put them on notice, and seem like a good guy. It also helps reduce changes, I can tell you. After the second change, it's amazing how the "cha-ching" of $95 wakes them up real quick



From contributor W:
Forgot to mention about the two "free" change orders... I work hard to get one of these used up ASAP, particularly on something that seems like it's no big deal. Like changing the pulls from chrome to stainless steel.

Hit them with the change order, and put them on notice right away that *any* change will require a change order. Do not give them a small change by not doing a change order. It sets all the wrong precedents. Do give them a small change by not charging the admin fee.

Make them understand right from the beginning, changes are going to cost 'em, and make sure you make money on your changes. It's amazing how different you'll view changes when you've established a system that actually lets you make money on them. Document the revised schedule and costs, and charge a fat admin fee. It works.



From contributor S:
Bits and pieces of my contract copy/pasted that covers the issues you are discussing.

Pricing, payments, changes and extra fees:
1) Upon acceptance of proposal, 10% of proposal costs are due as a non-refundable retainer fee for engineering and drawings. The shop drawings will include one review and revise session with one re-submittal of drawings with no extra charge.

6) Quoted prices are valid for 30 days after receiving initial proposal. Any work that is not completed within 6 months of initial proposal may have a minimum increase of % for every month over.

7) As long as the original overall concept, size, details and finish of proposal remain unchanged, there will be no extra charges for product. However, any and all changes to original proposal shall be re-priced accordingly. Any changes that reduce the price will be taken off of final payment. Any changes that increase the costs before construction begins will be billed at the same percentage rate as laid out. Any changes made after full deposit is received shall be due in full immediately upon acceptance of changes.

Scheduling:
1) After receiving full deposit and signed confirmation for drawings, product samples, and spec sheets, Millwork & More LLC guarantees delivery no later than the delivery lead time stated in original proposal. Any change orders after this point will increase the lead time of original proposed delivery date.

Drawing Services:
1) Drawings will include the following: Elevations, cross sections and floor plans that will identify all critical dimensions, details, and location of appliances/electronic components. Anything not specifically addressed as being provided by Millwork & More, LLC on the drawings or submittals are not included.

a. At first review, if any design changes are necessary there is no extra fee, however proposal pricing will change accordingly.

b. Any and all changes made after second set of drawings will incur a design fee of $150.00/hr and proposal pricing will change accordingly.

c. Any and all changes made after Millwork & More, LLC receives signed drawings and full deposit will incur a design fee of $150.00/hr and proposal pricing will change accordingly. In addition Millwork & More, LLC reserves the right to charge for 10% of any work deleted within 3 days of receiving 40% deposit. Any deletion of work after 3 days of 40% deposit shall be billed at a minimum rate of 10% up to 100% of value depending on the progress made at point of deletion. Any and all additional fees to be paid in full prior to construction.

I am in the middle of what would have been a nightmare customer if I did not have my contract. Yes, we are spending a ridiculous amount of time on changes, but I am being paid for time and have up-sold the changes for an additional 3k.



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