Never Pay Day-Rate

I’m currently reading Duncan Bannatyne’s book “Anyone can do it” and as would be expected he makes some very valid points.

“I can’t stress enough how important it is to agree fixed prices when agreeing deals with suppliers and contractors.” This is part of Bannatyne’s philosophy and he treats everyone the same, even solicitors. If he agrees a £25,000 fixed fee for handling a particular deal then that’s all they get, no matter if it takes them twice the amount of time they originally thought. “Why should a professional get paid more for being inefficient?”

I was talking about this with a bloke at work who mentioned that he’d commissioned a law firm to handle some small business for him. They priced the job and he asked them to put it in writing. After the job they put their bill in and it was for half as much again. When he questioned it they told him it had taken them 12 hours instead of the 8 hours they expected it to. He refused to pay it and they threatened to sue. He said, “Sue ahead. I’m not paying for your incompetence.” That was the last he heard from them, but how many people would have paid up?

When we moved into this house we wanted to put our own stamp on it. We agreed a day rate with our builder, Tommy. £150 for him, £100 each for his two Polish labourers/painters. It cost me twice as much as I expected, and I still don’t really know if he worked all the days he said he did, or if he had one or two labourers working every day.

I’ll never do it again. In the future I’ll agree a fixed price and will refuse to pay a day rate, and if it takes them longer than estimated, well tough titty. If they estimate it wrong, or they don’t work fast enough, or put enough blokes on the job, it’s their inefficiency, not mine. I will never again pay someone more money for being disorganised or incompetent.

There’s probably a lesson in there for all of us.