You may think you’re saving money, but you’re actually creating more money. If you’re spending $100, you’re going to pay $50 more in taxes, and you may start paying a higher percentage of every other paycheck that you receive.
I was talking to a contractor who had his work cut out for him. He was working on a project for a client and they were telling him to charge way more than he was going to make. Now his clients wanted to make sure he was charging them the right amount, and so they told him to charge no less than he was going to make.
How do you know that he’s not being charged more money because his client doesn’t pay him enough? He’s not charging less because he’s not getting paid enough. He’s doing it because he wants to make sure that his job is profitable. Also like most contractors, he’s the one who has to be the one to make the call on how much a project should cost.
One of the reasons that it is so hard to get a contract is because the terms of the contract are so hard to pin down. Many contractors, myself included, like to know what the project should cost and what the job should take. This can be difficult when it is a small project with a high hourly rate. The best way to do this is to make sure the client is paying the right amount.
Charging less money can sometimes be easier said than done. Often times, the contractor has to work in a tight budget. The only way the contractor can know that he is getting the exact amount they asked for is to try to lower the fees even lower. This sometimes leads to the contractor working with a lower rate. This practice is called “negative gearing”. If the contractor is paying the rate they were told they would, then they are not over-paying or under-paying.
Negative gearing is when the contractor has to use that rate to pay their bills, and then only pay when the bills don’t go up. But to avoid this, the contractor must reduce the rate they pay. This can be done by lowering the amount they pay, or by charging less for every dollar they pay. If the contractor is not under-charging, then we must be overcharging.
A contractor is over-or under-charging by not charging more than they should. The rate you pay is based on the amount the contractor thinks they should pay. The contractor’s job is to give that rate to the contractor, and they have to do it in a way that the contractor thinks is fair. If the contractor is not being fair with their rate, then we must be under-charging.
Just like the idea of charging more for everything costs more, the idea of charging less for something costs less. If a contractor is over-or under-charging, we must be under-charging. The most common way contractors have to overcharge is by charging less for the same amount they could charge. A contractor may charge less for a lot of items by offering less or free items, or by offering those items at a lower price.
But, is that really what contractors are doing? That’s why we have laws. If a contractor can’t justify their higher rates by offering a lower rate for the same amount the contractor could charge, then they have to justify it by offering a lower rate for a better deal. If they do this, contractor rates will be lower, the competition will be weaker, and prices will drop.
Contractors pay for their rates, and that’s exactly what the government is doing. There’s a lot of money for people who can’t pay for things. We have to pay for their own rate, and that’s a bad thing. But once you have that, you can actually charge for things you can’t afford, or if you’re actually getting a poor deal, that you can pay for things in that way.