I was teaching a class in Orlando today and brought up the idea of free estimates and who does that and out of about 20 guys, 15 of them rolled their eyes in the same manner of frustration that I do.
Who came up with that idea anyway?
Why did some contractor or trades person feel they have to give away their time and expertise just to get work…? They condemned us all when they first did.
My business may be slow but I sure do feel good about not giving away a few hours here and there anymore. I think I heard someone say it here a while back that its better to not work than work for free.
Replies
I never mind giving free estimates. Gives me a chance to see if I want to work with the customer or do the job. If I charged I'd be on the hook to bid and worse yet I might be working for someone that I really don't want to.
You would have no obligation to commit to do a job if you charged for an estimate.
Free estimates are very bad for our business.
It will slowy change I hope.
Russell
"Welcome to our world"
So you charge for an estimate and when the customer says "it's a go" you say not interested and keep their money? Geeze I could start an estimating only business and never lift a hammer again.
Make sure customer knows that an estimate is not a sure thing that you will take the job.
Why should we travel and spend time with out payment? We are pro's, lets act like Pro's.
Russell
"Welcome to my world"
Hey... I like the way you think. Charging people for nothing sounds like a business model to me... do we get our chicks for free too?
Sign me up!
Only if you know how to play the guitar on M-TV.
Russell
"Welcome to my world"
I have to say I needed that laugh from you two. Thanks
Charge for the completed estimate, not to walk through the door. A lot of my work is real estate punch out. People need my letterhead with a number on it at settlement. I found out early on that lot of agents/ buyers/ sellers just wanted my paper with no intention of hiring anyone for the job. Mostly work through one agent, she takes care of me and I take care of her.Same deal for any kind of insurance or 3rd party pay work. As I tell people, I could drive around for looksees all day but that doesn't bring in a dime.
I think the argument that all estimates should be paid for needs clarification.
Are you talking about an estimate, proposal, ballpark or WAG? Are you talking about designing something? Specifying something? or just telling someone what it costs to build something?
Bob's next test date: 12/10/07
Jim,
If someone wants anything in writing from me, there is a charge. Ballpark numbers over the phone are free but thats about it.
Mike
Just about what I do. Very rarely give any #'s with out seeing the job. To many if's.
Russell
"Welcome to my world"
You raise a good point. I think there is a big difference between a free basic estimate and a detailed proposal.
However, one must also realise the value of the risk. What I mean is that I will gladly put out detailed proposals for free to clients that I know are likely to move forward with the project.
Then there are the jobs where you bid and hope that you might get it.... chances being 1 in 10 maybe.
BUT, the industry standard is that estimates are free. If a builder wants you to frame a house and wants a quote first, you certainly aren't going to risk that project by charging for the quote.
IF a homeowner is making an insurance claim, I am inclined to charge for a detailed estimate with the promise of a refund from the contract price if I do the work.
Truth is that even when we give free estimates, they aren't really free. Somebody is paying for them somehow. That is a cost of doing business that is, whether you realise it or not, "passed along" to the consumer.
Consider commercial contracting. I've bid projects that were well in excess of one million dollars. There is no fee given to me for the vast amount of time such an estimate takes. However, the reward if I get the job is great enough that it pays for the time I spent on this one and the previous few.
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I refuse to accept that there are limitations to what we can accomplish. Pete Draganic
"the reward if I get the job is great enough that it pays for the time I spent on this one and the previous few."Exactly! We are in the process of a 300k "free estimate" right now. The client expected 225k. We explained that without engineered drawings and construction drawings, we have to pad the "estimate" to make sure we are covered. We'll sign a proposal with the appropriate engineering "outs" for the 300k, but not for 225k. At this point, we begin to dance. The client offers to re-think the scope and take somethings out and we offer to re-propose at a lower rate, subject to the engineering. After this next discussion, it's time to make a decision: either spend the money for the construction drawings and engineering, or do nothing. How much time have we spent "estimatin"? An hour or so. 3 of us met for 30 minutes discussing the basic job and ballparking the costs. Without construction drawings and engineering, it's pointless to spend any more thought than that. We know what we can build things for on a sf basis and we can quickly develop our own budget based on that. We add our markup and deliver this information to the client.The design consultant is "wasting" time driving back and forth and setting appointments...but isn't that the sales process on a complicated remodel job? Do we really expect to close a complicated remodel job with one 30 minute sales call? The difference is that we are using a dedicated design consultant to secure the sale. They know the deal and they know they will not get every job. They understand that it's a numbers game and they also know that if they set enough appointments and sit down at the kitchen table with enough people and develop the people to people relationships, they'll get enough sales to pay for the leads that don't pan out. Bob's next test date: 12/10/07
Excellent topic......
I'm a one man show doing residential and commercial remodeling. Last year was a tough row to hoe for me after the owner of a quarter million dollar, eight month long project bailed out on me a month into the project because one of his kids got accepted to a touring national rowing team and he got killed on his April taxes. So I had eight months I had to fill really quickly so I did a series of dog and pony shows to about 40 architects and designers in the area and had projects sent my way to look at. I put together very detailed proposals on over a million dollars of work between May of last year and the end of November and didn't land a thing. Couldn't even hang a door for somebody let alone land a worthwhile TI. People would hand me prints by their architect and I hand them a packet of info including an example of the very detailed proposals I put together for projects and they get very excited by the level of detail I provide which in my mind I'm hoping that inspires confidence in the level of and attention to detail I do. Anyway, I put the numbers together and it typically would take a good week /week and half to do it then have a meeting with them to present the proposal and it was not uncommon for them to say something to the effect of, " gee, thanks this is great. We just wanted to know how much it would cost." And that was it.... I did it about 5 times last summer for over a million bucks and nadda.
So I had my lawyer draw up a pre construction services agreement and essentially if somebody hands me some drawings and wants numbers I hand them my sample proposal and tell them that if they want this level of detail and planning I will charge them my hourly rate plus my fee. At the end if they want to proceed with the project and want me to do it I waive my fee. If they don't want to proceed then they pay me for my time and my expenses. I just started using it so I regret I can't vouch for how well it goes
BjR
I charge a hundred bucks!! Big or small. I do all referral work. Nobody complains!
They don't go to work for free, why should we
-Lou
Oak RIver Mike,
You need to take some marketing courses.. if you did you'd find the word free has an extremely powerful marketing appeal.
Now that is more or less standard practice you will seldom be seriously considered without a "free" estimate..
Has it been abused? Oh absolutely! The most recent house that is being built near me had over 30 free estimates the owner proudly told me. Further those were quotes just since January! He also informed me that the bids this time around (??!!!!) were nearly half what previous bids were..
Given the wide range of quotes he reported I can understand him looking for the hungerist dog to do the work..
I really feel sorry for the contractor who got the job.. first because the owner is a lawyer and I'm sure the language of the contract is iron clad in his favor. And second working that cheap has to be an act of desperation..
Given todays market conditions I understand why people are shopping around.. but it makes it really miserable to try to make a living.
we don't do free estimates
matter of fact we don't do "estimates"
we meet with the prospect.....learn about their needs.... take some pictures
and tell them we will be glad to prepare a Proposal for a fee
the fees have varied between $200 and $3000... these are not design fees
they are fees to do the kind of work that BjR just described
if they hire us to do the Proposal... we close about 98% on presentation
Mike Smith Rhode Island : Design / Build / Repair / Restore
Edited 2/23/2008 7:53 am ET by MikeSmith
Mike, I think you are giving free "estimates" when you show up and meet with the project. It's all semantics. Bob's next test date: 12/10/07
no, jim... i never give an estimate... it's counter productive and the estimate will always vary from reality
free consultation.... then they get to decide if they want to invest in me
it only took me about 20 years to figure this out , though ..... so i'll understand if you haven't gotten there yet , grasshopper
Mike Smith Rhode Island : Design / Build / Repair / Restore
I'm trying to draw the conclusion that the terms: consultation, estimate, proposal, ballpark, etc are often interchanged and semantically speaking, there might be more common ground than seems to be indicated.During your "consultation", do you ever talk about budget? If so, you gave an "estimate", whether you want to believe it or not. Bob's next test date: 12/10/07
Is funny-- I posed that question on my blog last week. Guess what the results are.
14-15
Now, I don't know about demographics of the visitors--likely that will be the next poll, but it has been a see saw battle for the entire time.
I just assumed I would get blown out in favor of "Free" estimates.
That said...I'll qualify.
Free Estimates...certainly not on the phone.
If it is easy to do and I'm not busy...I'll drop in for a casual chat about the project...20 min max for free. We won't be talking design, only ballpark budget +/- 10k. I'll put price to a project if they have it well detailed and I have qualified that they are out to buy quality--not cheapest price. (I actually ask them flat out if I am weary).
Fences... Sure...free quotes, but only after heavily qualifying on the phone. We have been talking about just posting basic pricing right on line.
All outdoor woodwork decorative in nature, decks, pergolas etc. will normally start with a paid consultation, even in Florida I believe. (that's what we equip our people to do...sell designs where it will suit them to sell the job).
That said, when the economy is upside down I assume our people will do free quotes when it suits them to maximize every contact...anything else is lunacy.
L
GardenStructure.com~Build for the Art of it! Decks Blog
Hey Lawrence,
Good to hear from you...
I like your methods for the estimating part....Makes good sense. I like the 20 minute max part too.
By the way, I'll hi-jack my own thread and mention I saw Rush a few times last year and once in TO. Going to see them a few times this year as well. Always a favorite!
Mike
Hey Dude-- I met Geddi!
Was doing a cool fence in Rosedale a few years back...who pokes his head over the fence and says "Hi Guys... That'll look nice!"?
Yup... He did.
You can bet I gave him a card but quick...couldn't remember my own name at that time...likely sounded nonsensical...but did give him a card and stopped trying to speak. I musta looked like Bubbles I was so freaked out.
Should see his yard...looks like one of his album covers but with a big pool and a million little kids everywhere!
LGardenStructure.com~Build for the Art of it! Decks Blog
Frenchy
I think this lawyer is going to be posting something like "This can't be good" thread.
http://forums.taunton.com/n/mb/message.asp?webtag=tp-breaktime&msg=99831.93#a108
Rich
The guy I am working for now has offerd me cash for a discount and has suggested that other contractors are working for less because of the economy. My response was that my bank treats cash just like a check and when the economy comes back, can I charge you more than my standard rate?
This is what i call stagflation. Busy at a lower rate!
That brings up another point.
When someone is negotiating before you offer a price... Turn around and walk out the door.
They will negotiate during the estimate, during the job and at the end--after you are finished and are trying to get paid.
There should be no expectation of profit...
Here's the laugh of the day... Canada Revenue Agency... (like the IRS) in the US...
They have a big sign in the lobby stating that they do not accept cash payments. They, being the government print the money...but they won't accept it as legal tender. (CAN'T WAIT FOR THEIR REACTION WHEN I SHOW UP WITH A CAMERA PHOTOGRAPHING THE BUILDING...BUT IT HAS TO BE ON THE BLOG!)
I nearly fell over with laughter...and noone else in the building got it at all.
I accept Cash, Credit Card, Check ... it's all money.
REdiculous!
LGardenStructure.com~Build for the Art of it! Decks Blog
"When someone is negotiating before you offer a price... Turn around and walk out the door.They will negotiate during the estimate, during the job and at the end--after you are finished and are trying to get paid."I don't agree. I think this argument has been made the rounds before.If someone is negotiating before you offer a price, they are trying to establish a budget. Secondly, some people are negotiators by nature. I've worked often with these types of people. In MI, they are called builders. I learned early in my career that I was going to have to give up 500 or 1000 off my price so I'd go in there 2000 higher than I wanted. I often ended up getting more than what I really wanted (back in the good ole days). Bob's next test date: 12/10/07
Maybe it is a cultural difference we are hitting here Blue.
Financial rules are different north and south of the border. I tested that theory 5 times before making it a hard rule. 5 for 5, final payment had to go to court or at least spend more time than it was worth to collect... that said...over 22 years. However I haven't had one since I refused to deal with negotiators.
True enough though... ours is mostly high end woodwork so money shouldn't be an issue, and every 5 years we will all meet up with a nutcase. Your point has merits.
The last time though... 5th job for the client and they were bankrupting a shell company to renovate 2 houses-- and doing it on the contractor's backs... I was the only one to get paid but not before some uncomfortable wrangling (negotiating with a mobster is always uncomfortable--see--if I had stuck to my own rule I wouldn't have had to go through all that wracking fear!). That was about 4 years ago...
LGardenStructure.com~Build for the Art of it! Decks Blog
Blue,,
Try this trick instead of inflating your price. Agree to the lower price while you remove something for that lower price. example.. OK I can do it for your number if you will provide a start up cash fund of $ XXXXXX.
The reason I dislike inflated starting numbers is on several levels..
first it gives them the idea that your first number is somehow inflated.
Second the deal still isn't done yet, if you come down that $1000 or so he can and often will keep trying for more discount.. I once took a car dealer from $1200 down to $300 using that technique. (there is a lot more story than I want to type here)
Third it violates the If I can will you rule. which means they get something for nothing which makes you weak..
Fourth the worry how is he going to make up the difference question is in the back of his head and if something isn't done to his liking instead of simply asking you to change it he starts complaining about being cheated..
Thanks for the tips Frenchy. You have to remember that I was "negotiating" with builders, who already knew what their budget was for the service that I was providing. The fastest way to the deal would be for them to tell me their budget and I decide if I want to do the job. Some builders do that, others opt to make $500 or $1000 per minute negotiating. No technique really matters. If I say 10k, they say 9k. Their budget might be 25k but they are going to take another 1k "because they can". For the most part, these negotiations are fast. I say 10, he says 9, I say ok. Sometimes it would go like this: I say 10, he says 7, I say "By!" and walk out. Normally, I'd reach over and take my business card out of his hand too. Bob's next test date: 12/10/07
Blue,
In my 17 years selling telehandlers I saw plenty of such negotiations.. Often I was on a close basis with the contractor since he knew which of his crews didn't have a telehandler and wanted me to sell them one so they could do the job faster and he could build more houses..
Those contractors who low balled jobs often didn't expect to get the job for that price. They wanted to see what the people were like to work with.. If they caved in and were willing to work for the much lower number he wouldn't use them.. If they stood fast they got their number but he worked them pretty hard to get them to yield..
Then they'd get a few houses to frame and depending on how fast they got them past inspections determined how much he used them.. If they could frame and seal the house past framing inspection in two weeks they stayed busy,, if they could do it in 4 days as one crew did constantly they stayed working long past everyone else..Plus he had them only do one of 4 plans without any changes. Those guys seldom ever took a tape measure or level out Yet everything was straight, plumb, and square..(I digress)
It was that way because I helped them learn to read people and in turn I got to sell equipment.. contracting is a relationship game.. Those who use price only usually fail..
Frenchy, give it up. You are comparing apples to oranges and nothing you said makes sense to me, nor does it apply. Bob's next test date: 12/10/07
Lawrence,
If they are negotiating from the get go they are excited about making a deal and if you really understood the art of the deal you'd simply get your feelings and ego out of the way and let a deal happen..
Just for information when people are talking about money they are also talking about BUYING! If you are skilful you will turn that enthusiasm into a deal at your profit margin..
Hey don't feel bad, Americans tend to be lousy at negotiations. We seldom do it and really don't understand the process unlike other cultures which negotiate everyday on every purchase..
Hey Frenchy--
You are Right... I stand corrected.
When you give them the price and they negotiate that price down without accepting downgrades whatsoever... (nibbling)... that is the bad sign.
Poorly crafted line there.
Canadian law has many holes in it that make it necessary for us to qualify prospects more effectively--high end work where you get taken for the final payment will put you out of business quickly up here.
LGardenStructure.com~Build for the Art of it! Decks Blog
procrazyman,
When you go to buy a car your try to get the best possible deal you can and so are customers.. don't be offended if they try awkward things to get a discount.. Americans aren't very good at negotiations. We don't do it daily as some cultures do..
If you really understand the process you know that when they negotiate that's the same thing as them saying yes I want to buy. Now all you need to do is get your feelings and ego out of the way and let the deal happen..
By the way that does not meanyou have to give up profit,, it means that you need to learn how to make a deal happen..
Guys,
Lots of good info here and a variety of beliefs in the process.
I still stick with how I do it as a phone chat and basic numbers are free but I am not going to someone's house or look over a set of plans and then give them a solid, hold fast number for nothing. As a few of you guys mentioned, I have done that too in the past and even though the folks said they were serious, once they saw a number, their plans changed.
By charging them, it shows committment on their part. I tell them there is a charge up front on the phone and then they can decide. Of course, I credit them back the amount I charge if they go with me. Its just I got tired of spending two hours at someone's project and then a day putting it together and then having them ask a ton of follow up questions and not making a dime off of it when they "thought it was going to be so much cheaper". How many times have I heard that in the last 18+ years?
The way we do it now seems to work out nicely as I eliminate tire-kickers on the phone.
Mike
Paul Harvey says "Self government can't work without self control."
Free estimates are a valuable way to get to know the customer, and an opportunity to discuss the job. In the proper situation, they are a valuable way to develop future work.
For example, we have one group around here that has a reputation for honesty, integrity, and seriousness. If one of 'their' people call, I can safely assume that the person is serious about getting the work done. I can also safely assume that, once we have an agreement, it will be honored.
Other folks, alas, have other agendas.
The price shoppers are the bane of reputable businesses, as they make it a game that's only about price. The fact is, very few jobs actually develop the way they are first proposed.
"Competitive bids" also ensure a high price, as everyone realizes the customer has no intention of ever providing future business. Since every successful business depends upon repeat customers, the business has no interest in these folks.
Some folks also call out of sheer boredom. They have no intention of ever getting any work done. Perhaps they just want a price for negotiating a deal ... but they'll never get the work done.
Other folks actually expect you to subsidize / finance their own business fantasy. They are under the impression that your $100 worth of work will translate into another $1000 for them at sale time. Attention flippers: We're not stupid. We want our cut.
The absolute worst case is where the customer wants a detailed proposal ... down to the smallest part, and the most trivial action .... with the deliberate intent of using your information to coach him through having a day laborer do the work for peanuts. These cretans will also cherry pick the price breakdown .... going so far as to get, say, the tile from one source, and the thinset from another.
Such folks are simply dishonest. They are misleading you, so that you will provide them with your advice for free, under false pretenses.
There is no easy answer. A lot depends upon your individual circumstances. Look at that first call for an estimate as the starting point in what you hope will be a long friendship.