Everywhere. On the commercials, in the newspaper. “Get your free estimate! Free in-home-consultation! Call Today”. Photo: siyaya
We see these ads just about everywhere in the construction business. My question is: Who really pays for these free estimates? Before I can help answer that question, free estimates have been the norm for getting in the door to a potential customer’s home or business. A potential client will think, “Estimates are free; what do I got to lose by calling XX Company to come out and give me an estimate? In fact, let me call 2 more contractors to get my free estimates!”
The truth is, estimates are never free. Here’s what it takes to give out a “free” in-home consultation or estimate:
Time. It takes an average of 1 – 1½ hours to drive to someone’s home, chit-chat up the project, take measurements, take notes of concerns and expectations from the homeowner, pet their dog, climb a ladder, crawl under their house, etc., etc., and etc. Doing 3 to 4 estimate per day would leave you little time to prepare for the next day’s projects. Sooner or later you may have to hire someone just to do estimates. Photo: clipartguide
Money. It take gas to drive out to make estimates. And gas these days ain’t cheap. The cost of related wear on your vehicles, and mental wear from the quotes you spent time on — when a homeowner wasn’t going to hire you anyway (them wanting to know what a project like theirs’ cost) — at your expense.
Qualify your leads further. There is still ways to minimize the financial impact of giving out free estimates. Here’s how:
- Be a good listener. When talking on the phone or through email for the first time, listen for triggers in the conversation that say “this person is a tire-kicker”. A tire-kicker is one who tricks you into thinking they are ready to buy, but in reality, is not ready and just wants to know your price. Perhaps to play your price against another contractor.
- Ask the right questions. When are you ready to start the project? How many other contractors have you gotten estimates from? How do you plan to finance this project? Are you ready to sign a contract today?
- Have realistic expectations. Not one contractor has sold every job they went out to sale. Just doesn’t happen. You can, however, close the gap — by paying attention to those little hints you get and listening to your gut feeling on a prospect.
How to charge for estimates. A simple way for you to charge for estimates is this way:
- Offer a free ballpark over the phone or by email. Attempt to qualify the prospect during this conversation.
- Charge a small fee for in-home estimates, maybe something like $30 for a short, concisely written proposal detailing the project’s overview, permits, and cost. Larger schematic proposals should be included in the bid for work.
If the prospective client balks at an in-home estimate fee for a larger project, that is OK. Probably wasn’t the kind of client you’d want to have; not a good fit for all the parties involved. Sale your company on it’s value rather than the cost and you’ll be fine.
There will always be companies offering free estimates. Who really pays for free estimates? The customers that actually hire you (in the form of higher costs)! This amount is passed on to these customers in some form or another.
Kind of like higher insurance premiums. As a result of a few taking advantage of the system, it results in higher premiums for everyone else. To keep a company viable, this cost must be recouped from others. It appears to be unfair, however it is the truth.