Paying under the table leads to no paper trail which means if you have a problem with something someone did....no court will look your way. OTOH if you want to ask someone in this slow building market I'd say that's worth a shot.

Paying in cash does not necessarily mean "under the table". It also means paying the entire due amount promptly when the invoice is presented, for work done or materials delivered, with a certified check or in "cash", with a discounted percentage or amount clearly shown on the billing. IME, discounts for paying cash occur mainly if the alternative is financing. Thus, I usually get a 5% discount (after negotiated price) for paying cash when I buy a new car, because the dealer is not having to pay a bank or otherwise subsidize my purchase. I do not get [nor expect] a discount for paying cash for most services although a neighbor's orthodontist discounted his bill 2% for being paid promptly and in full.

Paying cash "under the table" rarely saves more than a few dollars, and can cost mucho in trying to have service done later. "Under the table" does not want or have a paper trail. If the plumbers or electricians or whoever is so desperate for work that they are willing to sign a statement showing a discount for the clearly specified and contracted job, that's not under the table. Anyone including the IRS can see exactly what you paid to whom and for what, which is putting the deal in plain sight on top of the table, even though it is "for cash".

We've got carpenters doing some dirt work in our crawlspace due to lack of work. Depending on where you are in the country, the subs could be quoting high to hope they get the job because they aren't busy. It is absolutely OK to negotiate with them and also OK to ask if they can do better if they get paid the day the work is done (versus the usual wait they would have from a GC for a bank draw).

It's not usual in the construction industry to be dead set on a price; a good estimator will add in some wiggle room. Unless this sub is that good and you really want to use him, if he won't negotiate get bids from others to see exactly where his price is. My DH is in the construction industry and frequently gets a call from the GC to take another look at the bid to see if there's some leeway.

Those who are persuaded to accept less often will deliver less than they had originally anticipated.

Those who are persuaded to accept less often will deliver less than they had originally anticipated.

Or come up with "extras" before the job is over,

This is a little off topic but the heck is a "DH?".
I was thinking that paying cash would be easier for all involved, no waiting for a draw for the sub, should get me a little discount for the convenience to them.
Hey bus, why do you think a sub would deliver less if they agreed to take less? I dont agree with that sentiment at all. Sure it sounds cute and it's a nice little quote but i think you're assuming subs are not reputable. I don't doubt that a sub might find something to charge more for, but who hasn't had that happen to them in any walk of life? I think if the job is properly spec'd you can reduce most chances of 'extras' from occuring.

DH = Dear Husband, Designated Hitter, etc.

Unless you do a lot of projects or jobs are really hard to find, there is not much reason for a sub to lower his price to a homeowner but asking is the only way to do it.

In our case if we pay some of our subs within the 10th of the month or within 14 days we get a discount. For example our concrete sub gave a $5/ cubic yard discount. Some of our subs also accepted credit cards so we used a Visa credit card that has a 1% cash back. In the case of our concrete sub we saved approximately $500. Always ask the subs if they can do better on the price the way we look at it nothing ventured nothing gained.

Most subs i know including myself in the days when i subbed would somewhat take offense to a flat out asking to lower a bid. Other options such as the ones that have been mentioned above might fly, but be careful in how you ask because w/ most trades, the ego factor is high and quality trades people generally have a high pride factor in their work and attitude. Those the ones that are worth paying what they ask, the subs that can walk it after the talk!

Thanks for the responses. I'll sort of pick my battles, I guess, when asking a sub for a better price. I know the building around here (so of chicago) is dead, so the trades might be willing to come down to keep working. We'll see.

The first step should be in reviewing each quote with the vendor. Determine how they came to the total they did, and ask if there are any items that were padded or could be reduced. It's not unusual for a person lining up the trades to try to nail down some of the budgets before the deals are made. Some things, like concrete, are a set price per foot. I wouldn't ask them to lower their price if they were competitive. The only way to know if they're competitive is to have more than one bid. I wouldn't try to pinch a guys wage if I know he's charging a fair price to begin with.

I don't know what industry you work in but how about if I ask your employer to lower your paycheck by 20%? Would you agree to that or feel motivated to do your best work? If you want a home built (I think you said you are trying to build this yourself, you don't have the experience to call yourself a GC, nor the insurance!)then you should pay for it. Why do people always think that others should work for them for less.....where we live it is called the "Walmart Mentality" and you get what you pay for. Of course you could always exploit illegal immigrant labor to save a few bucks.

Good luck, you may need it.

I am a plumber so I will confine my comments to that portion of the job.

1.The complete bill is due and payable in full upon satisfactory completion of the work. Terms are check, cash or money order so the offer of paying in cash has no bearing on the final cost of the job.

2. Most of the job is finitely mandated by code and no reputable contractor is going to risk loosing his/her license by installing things below code standard.

3. My labor costs are the same, whether I am working on your house, a school down the street, the local hospital or just having the guys sweep the floor in the shop and wash the trucks.

4.The greatest variable in the bottom line is the cost of the final trim out fixtures you select. If you are willing to accept quality products from American Standard, Price Phister, Delta or some of the other common brands you can save a lot of money, to that end any reputable contractor will be willing to look at your proposal and make suggestion on where you can save money. On the other hand, if you insist on the high end snob appeal labels you can expect to pay a premium. That choice is purely yours, but keep in mind that the pipes in the wall are expected to last the life of the structure while those trim out items will probably be changed in 8 to 10 years purely for aesthetic reasons anyway.

5. You might find a plumber who will work for less if paid under the table but the question then becomes, why does he/she need to rely upon under the table money? In most cases those who are anxious to work under the table have a long list of financial or business ethics problems following them around. Do you really want your job done by that class of people?

To continue my thought, using lazypups post...

Your initial bid from the plumber may/may not have included the designer brand fixtures. When you review the bid with them you may find an area the bid can be reduced. If you've already spec'd out the exact faucets and will not change them, you'll not likely get a reduced bid.

This really depends on how much guess-work the bidders were left with. It's possible that you detailed everything quite well and the bids are accurate, just more than you were expecting.

Just to toss out a few comments...

1. If you pay less for a cash job that usually means the sub is not going show it on his tax return. Some subs will give you a receipt playing the odds that that piece of paper will not show up in the IRS's hands and others will not give you a receipt as they do not want a paper trail.

If the price is the same rather it be cash, check, or money order then it is probably a legal transaction even though some subs may choose to forget about that transaction at tax time. But there should still be a paper trail for warranty, etc purposes.

If the sub has an option of paying by credit card there may be a discount if paid by cash as there are extra charges for credit card purchases that are at the expense of the sub.

And as stated above there may be 1 to 10% discounts if paid by early in the month. Terms are usually something like 2/10 net 30 which means a 2% discount if paid within 10 days, otherwise the total amount is due within 30 days.

2. There are certainly subs in today's environment willing to work for less to keep a revenue stream coming in. I have seen that more the case for the subs that have multiple employees/teams & that helps retain & keep their people during these tough times.

The 1 or 2-man shops that lower their rates I would be more suspicious that it might result in a lower quality of products but not necessarily workmanship. If the job calls for a sink faucet replacement they may go with a $40 faucet as opposed to a $150 faucet. You need to make sure the specifics are called out in the contract.

3. Re: lazypup's statement of "3. My labor costs are the same, whether I am working on your house, a school down the street, the local hospital or just having the guys sweep the floor in the shop and wash the trucks."

Lazypup obviously runs a class operation & has been a valuable resource to this forum over a long period of time. However, any business owner that is working in a market that has seen work/sales drop dramatically has to make some tough decisions. Do I lay people off, or do I tell the team we are going through tough times & that everyone will have to accept some % cut-back on their pay till we get through this however when things turn-around pay will be restored, or do I as the owner take the hit in my income/profit and keep everyone's pay the same, or do I do a combination of the above.

With a class operation I don't think you have to worry about workmanship quality dropping off but you should be sure of the finishes.

I answered nacnac's question factoring in the economic times we are currently in. I am aware that there are some parts of the country that are not as hard hit by the economy and new construction hasn't been horribly affected, but here in the midwest (where nacnac is building) times are desperate. There are very few new homes under construction and I can't count how many GC's are out of business. When I say desperate, I mean new home construction is practically nonexistent. Interest rates here are up and the homeower is also taking a risk in building that his plant won't shut down or that he'll be downsized.

We all need to do whatever it takes to to boost this economy. That might mean a sub has to put his pride aside and realize that no matter how good he is, he might have to lower his price a little to get work. He can ask his suppliers to give him a little discount (remember the suppliers are hurting too) or reduce his profit margin slightly. At the risk of offending some trades on this board, some carpenters can have a little ego problem and if they are digging dirt in my crawlspace, you know times are hard. I didn't ask them -- they offered.

In our construction and distribution business, we negotiate prices all the time to get the job. That is why we currently have much more work than our competitors. I would also consider our employees to be the best in their trade. Our quality of work doesn't change based on whether we came down in price or not. We build in a certain percentage for OHP (overhead & profit). When times are tough, that percentage gets dropped to get work.

Very well said gardenchick1.

I am actually flying in some tradespeople from several states away. Prices are and should be directed by supply and demand. They certainly are when things are running hot and heavy!

Some business have actually called me back asking where I am at in the build and if they should revisit the bid. I see this as them being very astute to the business climate and wanting the work, nothing wrong with that. The quality issue is always and issue, just keep an eye on things.

It is possible, that when the sub bid your job originally that he already had it tightened up in order to get the job to begin with.
There may not be any cushion.

Yes I am willing to risk not getting the job by not saying uncle when my arm is twisted.

No, I dont need the experience.

A Message From the Low Bidder:
Dear Cherished Customer,
Thank you for hiring us. We look forward to saving you a lot of money compared with all the other contractors who submitted quotes. As for your inquiry as to how we can charge so much less than everyone else, I welcome this opportunity to explain how we operate. You see, unlike many of our competitors, we don't believe in paying top dollar to employees. There are so many people looking for work these days, it's pretty easy to find some desperate enough to work for far less than they're worth. If they start complaining, we just get rid of them and find replacements in a few days. Most jobs get disrupted just a little bit. Besides, we don't look to hire the best workers. Most of the work required for your project can be performed by people with almost no skills. (In fact, if you care to do some of it yourself, I can save you even more money.) Heck, I've learned that some of the best employees don't even speak English. They work cheapest of all and never sass the boss. Most of the time they can figure out my hand signals telling them what to do. If anything complicated does arise, that's what I'm here for. It may take a few days for me to get around to check out your job, but with all the money you're saving, I'm sure you won't mind the wait.
Not only don't we pay our employees very much, we offer no benefits, because that adds way too much to overhead. Our employees know that if they get sick and can't work, they don't make any money. So you can rest assured that they'll show up at your job even if they come down with pneumonia or TB. I'll tell you something else -- our installers and technicians work fast. A lot of contractors tell their crews to hang around jobs forever making sure everything is just right. Experienced as I am, I know exactly when something is just good enough to get by. That's when we call it a job. Think of all the money you save with us not worrying about frilly details.
Another thing is, we know how to cut through all that government paperwork. Most rules and regulations make no sense. For instance, everyone in the construction industry knows that hardly anyone ever gets caught working without a permit or trade licenses. The money we save by avoiding these technicalities gets passed on to you. We also cut corners with code requirements & standards at every opportunity. Standards do nothing but jack up the price of a project. By substituting cheaper materials and ignoring labor-intensive procedures required to meet code, we are able to charge much less than those suckers who operate by the book. Insurance is another area where we realize big savings. How many jobs do you ever hear of where there's a payoff? Insurance is nothing but money down the drain. If something does go wrong, you can always sue us. What more protection do you need than that?
I'll let you in on another inside secret. We cleverly save you money by not paying all of our bills. Our company has accounts at about a dozen supply houses around town, and we never pay for material unless we absolutely have to. Most wholesalers will carry us for 60 or 90 days before they start nagging me about payment. Then I can usually string them along for another few months with promises or token payments. If one supplier cuts us off, I simply take my business to the others and go through the same routine. It's a game that real sharp contractors like myself have refined to an art form. You ought to be proud to have your job done by an artist!
Something else that separates us from the pack is that we're not a bunch of namby-pambies hung up on safety concerns. Accidents will happen, so why bother trying to prevent them! Some contractors worry more about their trades people getting hurt than they do about getting the job done fast. Believe me, hard hats, eye shields and work gloves only slow people down. So we don't supply those things to our workers. Here's where we gain another advantage by hiring a bunch of people who don't speak English. They can't read warning signs that might make them too cautious. This saves you money.
Also, I'm sure you noticed that when you called me you reached an answering machine, not some secretary costing over $10,000 a year. Sorry that it took me so long to get back to you, but that's the price you pay for saving money. You may have also noticed that our trucks are run-down, our tools worn out and this letter is being written on a 1950s vintage manual typewriter. Our philosophy is to make do with whatever is already paid for, no matter how old. That's another reason we can charge you so much less.
Nor do we waste money on association dues and educational seminars like some of our high-fluting competitors. Believe me, I've been in this business for more than 20 years and I learned everything anyone needs to know in my first two years of apprenticeship. If it was good enough for my daddy and granddaddy, it's good enough for you. By the way, did I mention that we guarantee our work. Just make sure you catch what's wrong before the job is done, because at the prices we charge, we can't afford any call backs. Thank you once again for letting us do your work. We're happy to be the low bidder. I'm sure you'll get your money's worth.
Sincerely, The Low Bidder

If the sub has already tightened up his quote, then that is what he should say to the customer. Just because someone asks for a better price doesn't mean the sub must adjust his bid, but I believe it is OK to ask to see if there's some leeway. If you as a sub don't need the work, then pass and let someone who needs to feed his family the opportunity to do the job.

A low bid doesn't mean the scenario above is true. We are sometimes low bid and our workers are some of the highest paid in the trades. We require continual recertification and training. We do everything by code and always pass all OSHA inspections. We pay over $200K each year for liability insurance, so everyone (even the owner and GC) is covered under our policy. We also warrant our work with a written warranty which we adhere to. Not only do we pay all our supply bills, they are paid within 30 days. If our employees don't wear required safety gear, they get sent home for the day. We don't mess with an employee's health or life. We have full time staff to answer phones and all our customers have our cell phone number as well as the number of our job superintendents.

Yes, I know there are people like rollie describes but that is why you get references. Folks like that usually aren't in business for long. Before you hire, check out their past projects and customers. Be diligent. These boards are to inform and pass along information to those "not in the business" or to those newbies who are building their first home. I don't think the focus of these boards should be on scaring someone out of accepting a low bid nor necessarily keeping them from negotiating a better deal. The main thing to keep in mind is that the homeowner needs to be as informed as possible about costs and have an open dialog with their subs. If a sub has already given his best price, then he should say so, but I don't think a homeowner should just blindly accept a bid without ever questioning anything.

Not trying to be inflammatory, just my honest opinion.

Wow, that's a bitterly funny diatribe.

Although I don't wholly agree with rollie's viewpoints about the relationship of price, service, quality and safety commitment amongst contractors, I do think there's something to be said for being leary of the "Low Bidder".

I don't believe in asking Contractors to "sharpen their pencil" on a bid for residential building. If you're building a 100 unit apartment complex, get the flooring guy to shave 1% because you'll keep him busy for 6 months, but not on single family construction.

I think most of them put forth their most competitive bid, and you take it or leave it based on their quality and availability. If there are materials included, or items that are above and beyond code, asking if the price can come down by making trade offs in some things is appropriate. But don't ask them to reduce their labor rate. Most are already operating with as thin a margin as they can.

Remember, High Price does not equal High Quality or Full Commitment to your Job. And speaking English is not required to do good quality work... although it does help in teaching folks what is good quality work. Their are good and bad spanish speaking crews, the same as english speaking ones. Experience, oversight and communication by the head of the crew is what makes a crew churn out quality work.

Most people and especially proffesionals all to well understand what low bid usually delivers... or doesn't.

Markets change, things change. Credit lines have been froze, projects have been stopped, people have been laid off. Housing prices haved even fallen and munincipalities are laying off building dept personal.

Supply and demand is alive and well. I have had more business cards left on my jobsite in the last few weeks than the previous two years. Several of these tradespeople were high-end I tried to get but could not, now I could. They are basically asking me to give them a number and they will see what they can do.

If anyone wants to stay home and eat macroni, more power to them. But I fail to see the relevence between that and normal market behavior which is in-fact happening on its own with-out even being prodded.

"Their are good and bad spanish speaking crews, the same as english speaking ones".

True, however if they are illegal, they are breaking the law as well as their employer. If the price is low due to paying lower wages to illegals, forcing them to work longer hours in sometimes harsh conditions, not cool ,imo and is why illegals should strive to get legal in order for them to have rights as well as the prevailing wages/humane work conditions.

Just this week, I was 2nd in a project. 15K higher than the low bidder with a 2 month earlier delivery schedule on a 350K project..
They still went with the low bidder.

Doesnt bother me, I didn't want it, nor could I do it for 15K less. I didnt go crying to the decision heads and try to negotiate my way into the contract, although, Im quite sure I could've tried .

I assumed that my 2 month earlier delivery schedule would have weighed more than it did. I was mistaken. They wanted a June 30 delivery, which I offered. They opted for 15K less, and an August 30th delivery to their commercial building. So it goes, in the bidding game.

My posting, was mostly out of fun, nothing to get too serious about, but know, that there are bidders out there that operate that way.

I withstood the farm/energy crisis of the early 80s, when I did not know where my next pay check was coming from.

This is nothing like that... yet.

There is a large majority of people out there, that have seen nothing but the gravy train of the last 25 years.

This is nothing more than a market correction.

All will be well again, its just going to separate the people that run their business as a business and are able to manage their expenses , vs those that dont or cant.

Maybe the original poster lives in the same part of the country as me. We have had a moderate, steady building boom in our area and well, things are still the same way. Come to think of it, not much really changes a whole lot and trends seem to hit us much later then the rest of the busy areas in our country, even within our own state. Right around Christmas there was an article on the front page of our local newspaper touting the same sentiment and it included contractors agreeing. No one is really hurting yet, which of course is a good thing--except for those of us building-- LOL!

I don't think it hurts to ask, esp. if you're not insulting about it. Good luck!