Bryan Caplan  

Less Stumped

Stumped... From the Quaint to the Bizarre...

The high bidder called my wife this morning, suggesting that his price could come down. When he found out the price we paid, he asked a lot of questions, and exclaimed "You got a great deal!"

So perhaps his strategy is simply to bid high, see if he gets lucky, then call back a few days later and cut the price.

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COMMENTS (4 to date)
Mr. Econotarian writes:

Price discrimination.

I sometimes help a landscaper do customer estimates, and find he consistently underestimates his real costs. And he often gets underbid by other contractors. Who, I suspect, are making even more egregious errors in their calculations.

Now that the work has been done you could figure out for yourself if you got a great deal--I'm guessing you did, and the contractor lost big dollars unless there was considerable salvage value to him in the wood (firewood).

Call an equipment rental company and price out the cost of any heavy equipment that was used. Add to that $50 for each chain saw used. Find out what it would have cost to transport and dump the wood.

I'm guessing this was an all day job, so multiply the number of workers by 8 hours, and that by $40, to get labor.

My guess is that you will come up with a figure around $3,200. And that you're officially an exploiter of labor.

Jim writes:

In the WSJ today they had an article that had bids on a house siding job that ranged from $14000 to $63000! The $63000 quote was from Sears...

David writes:

Some price discrepancy can be attributed to differences in maturity of the individual businesses. A young business will price more aggressively than an established business. A mature business has a more predictable cash flow and a certain portion of the business might be considered lagniappe. As my Dad often says, "you can always go down on a price but you can never go up." Finally, whenever we are way low on a bid we fret about money left on the table and what we're going to need it for that we didn't think of.

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