I’ve had a few requests on how to charge for estimates.
If you’ve been in construction sales very long, you’ve met more than a few potential customers who have asked for an estimate, and you learned after a lot of work that they were just shopping. Or, there are the customers who just like to talk. Money changing hands means a commitment – don’t spend the time on a detailed estimate unless they are serious about the job. And by the way, if your advertising includes “Free Estimates”, take the word “Free” out. The calls you get for “Free Estimates” are not from clients who want to buy.
There are a few ways to approach charging for your estimates. One is to just tell customers right up front that you charge for estimates. You will visit the job site and talk with the folks about what they want done, compile an estimate, give it to them and pray you get the job.
We have seen companies charge from $50 all the way up to $750 for estimates, depending on where they were located and the type of work they did. Those that charge for estimates this way all seem to have a different method of doing so. If your customers are willing to pay you in this manner, it’s okay.
However, I would not normally choose to take that approach. I think that to build rapport and trust with a potential client, I would visit with them and talk about their project. I want to see if they qualify to buy from me, not just be willing to give me a check. I want to know there is some common ground on which to build some trust and eventually a good working relationship.
To do this, work through the four basic questions routine, which can be found in the book, Profitable Sales, A Contractor’s Guide. These questions include setting the budget for the job.
Then tell your potential customer, “John, Mary, here is how we work. For us to put an effective package together for your consideration, we will need to set up a design agreement for you. With that agreement in place, we will design your job to meet your budget, we will do a firm price quotation for you, we will prepare the agreement to build your job as we have discussed and bring the whole package back to you for your consideration. If you approve our proposal, we will then get your signatures on the agreement, an initial down payment from you, and then take the whole package in and start the permit process.”
Now, button up and listen to what they have to say. If they say yes, subject closed, start writing the design agreement. It should include enough money to cover the cost of all design time, drafting, estimating, proposal writing and anything else that you or your company personnel do.
Used correctly, this procedure gets you paid for doing estimates and you should be able to convert a very high percentage of those design agreements to actual jobs built.
What if they already have plans, the design is already in blueprint form?
If you’ve walked through the four basic questions, you have an idea of their budget. But you don’t know if the plans will work with their budget.
So instead of suggesting a design agreement, suggest a feasibility study or value engineering where you will review the plans, review the job, and do a firm price quotation to see if the plans can be built for the budget.
Either way, asking to be paid for estimates will get you around those that are trying to get you to work for free. Remember, your time is worth the value you place on it and are willing to enforce. If you do estimates, design work, proposals, or any combination for free, you have only yourself to blame for the time you waste.
More on this, and a sample design agreement, are in the book, Profitable Sales, A Contractor’s Guide.
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations.
wpDiscuz