The Problem with FREE Estimates
Why Contractors Should NOT Give Free Estimates
Would anyone go into a grocery store and ask to take the food home to cook it before deciding if they want to pay for it?
How about asking to drive a new car for a week before returning to the dealership to work out the terms of payment or return it?
Yet, the remodeling industry does just this, on a regular basis, by giving out free designs and estimates. I think that the design of anything has an inherent value in itself and handing that off to somebody for free devalues that and our industry professionally.
Charging for estimate is still a relatively new approach and one that is growing in our industry.
Accurate Pricing – Not Estimating
I think it’s really important for contractors and clients to understand that accurate estimating takes time; It’s a professional “service” in my book and what professional doesn’t charge for their services?
Let’s talk about “Ball-Park” Pricing
There have been so many times in my career, where a homeowner asks for a “Ball Park” price for their project. The reality is that MOST “Ball Park prices,” end up being nowhere close to the actual price of the project?
I’m not saying it doesn’t have value in some selling scenarios. I am saying however that when contractors offer a ball park price, more times than not they get it wrong.
Do You Think You Should Charge For An Estimate?
I recognize many in the industry would not agree that companies should charge, because many believe that it would hurt business.
Do I really want to waste hundreds of hours every year and lots of money for jobs I’m never going to get?
Many customers are willing to pay for design and estimates because they understand the value of the process, and they recognize that businesses have to make money to survive.
When you think about it, there are very few industries that give things away like the remodeling industry does.
Charging for your estimating time is hard to do initially, not all contractors do it, and that makes it hard to compete. For me, I had to realize that I didn’t want to compete with other contractors for my work. I had to charge what I needed to charge to maintain my business and estimating job costs takes time, experience, and is a service.
Estimates Cost One-Way or the Other
Somehow the cost of creating an estimate must be recouped by the contractor.
Some contractors may say they don’t charge for estimating.
If that is true they are working for free and the cost of estimating is not included in the price quoted to the prospect.
I don’t know about you, but in my opinion if you do estimates for free you are undervaluing your worth and might also be putting your professionalism in doubt.
If you are not charging for estimates, and you also are not accumulating enough money to someday retire.
And, contractors who do so are making things challenging for those who do charge by helping consumers think they should get estimates for free.
On the other hand, many contractors who tell their prospects they do not charge for estimates are actually not charging for the estimate in advance, they recoup the cost of estimating through their extras, or markup; but only if they sell the job… I’ve never like that idea.
Have a Meaningful Conversation – Fixed Cost
So why do prospects get offended, or taken aback, when I tell them you charge for estimates?
Did they expect me to work for free?
Do they work for free at their jobs? I doubt it.
The more meaningful conversations about the fact is that “an estimate” is really just a guess and may not have any relevance to the true cost of what you would actually want to buy. And, as a result, I’m willing to meet with you, discuss the project, and scour through your plans and specifications, so I could give you a fixed price in place of the “estimate”.
So here’s a challenge…. Do what I did and start small. Tell prospective clients that you charge $150/$300 depending on the size of the project –for a 1 hour consultation. Use the word consultation because it sounds way better than the word estimate. People are also accustomed to paying for consults.
After all you are consulting with them and may even be giving them design ideas or telling them what wall is a bearing wall, etc.
Note – Some guys I know charge 3% on large jobs. You figure out what makes sense for you.
Tell the client that that fee also includes your written [fixed price] proposal. Also tell them that if they hire you – you will credit that fee toward the job. If they agree – you need to turn around a written proposal quickly and professionally.
I did It – How’d It Go?
I initially thought that I would lose business, I didn’t! I stayed the same – and I had more time to myself, and I got rid of ALL the TIRE KICKERS that wasted a ton of my time.
Try it for one month and see what happens. You may be surprised and never go back to FREE estimates again.