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Estimates: Free Or Charge?

 
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Old 10-18-2006, 08:35 PM   #1
 
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Estimates: Free Or Charge?


It dawned on me lately that we spend alot of time "doing" estimates.
At present I offer free estimates. But if you sit down and figure out the hours spent on figuring out that free estimate it ads up.

-one hour initial meeting
-one to four hours actualy pricing out job ( depending on size of job)
-one - two hours sitting down with customer going over estimate

So generaly you're looking at a min. 3 hours up to 9 hours depending on the size and complexity of job.
Now granted I know there are guys out there that can look at a job and come up with a price in a few minutes. I'm not talking about roofing, painting, floors, etc. all pretty cut and dry.
I do remodels - kitchens, baths, additions, etc. also floors (cut and dry, measure room - here's your price.)

When I price my labor for a job I generaly want about $50/hr.
So using that price every estimate is costing between $ 150 - $450.
If I get the job great. But what about all the freaken TIRE KICKERS out there. I'm thinking a token $50.00 estimate charge later credited to the accepted proposal would weed out some TIRE KICKERS. And save me time, money, and aggrivation.

Any thoughts?
Anyone else charge for estimates?

p.s. I'm not one of these big design build firms. (One of my buddies has such an operation and he charges hourly rate from first meeting to closing of job much like a designer would.) I'm a small remodeling company fairly new on my own and very new to marketing (Most jobs are referals)
Just wondering what everyone else is doing out there.
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Old 10-18-2006, 08:42 PM   #2
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Re: Estimates: Free Or Charge?


A. Qualify better on the inital contact
B. Figure out how many bids you do to score a job -lead to sale ratio- and tack on the costs of the leads into your overhead costs.

Example, you win 1 out of 3 bids. The cost to win that job was (average of $150-$450 = say $300) so $300 X 3 = $900. It cost you $900 to land that job. Fit that $900 into the cost of that job.

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Old 10-18-2006, 08:48 PM   #3
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Re: Estimates: Free Or Charge?


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Old 10-18-2006, 08:50 PM   #4
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Old 10-18-2006, 10:27 PM   #5
 
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Re: Estimates: Free Or Charge?


Quote:
Originally Posted by C.C.R. View Post
I'm a small remodeling company fairly new on my own and very new to marketing (Most jobs are referals)
Just wondering what everyone else is doing out there.
I tried charging for estimates. My company's pretty new too. Had one guy nearly physically escorted me out of his house when I told him the estimate (I called it "preliminary design" fee) required a fee.

Most of the remodeling companies around here give a quick ballpark. Then, they charge per hour (not a flat fee) for design and THEN they arrive at a true estimate. I believe the design is a seperate contract as well.

Try it --- see what happens. On the flip side, it's hard to do this when you have 10 other companies screaming "Free Estimates!!"
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Old 10-18-2006, 11:00 PM   #6
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Re: Estimates: Free Or Charge?


When they call you up and ask you to come out for an estimate tell them you charge $1.00 for the estimate. You wouldn't believe how many tire kickers this will eliminate for you. And when you finish the estimate make sure you get your dollar.
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Old 10-18-2006, 11:35 PM   #7
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Re: Estimates: Free Or Charge?


I've done it both ways. Much more the free estimate way then the pay for it way, but I have done it both ways and there are customers and circumstance that it will work. Some time I need to take the time to examine it more and take another stab at it.
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Old 10-19-2006, 07:35 AM   #8
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Re: Estimates: Free Or Charge?


Being referral based it may be best not to charge for basic estimates.

If design work is involed then I would.

Now if we are referred by a realtor, or engineer, for a house that is selling but not sold, then I charge and take it from the price if the work is done.
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Old 10-19-2006, 11:24 AM   #9
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Re: Estimates: Free Or Charge?


We charge $30 for estimates but only take on small projects by the hour mostly. One of the reasons that I quit remodeling was to many wasted Free Estimates for tire-kickers.
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Old 10-19-2006, 01:49 PM   #10
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Re: Estimates: Free Or Charge?


I think it depends on the market you are operating in, and the type of products and/or service you are selling. Fortunately for me, it doesn't take long to come up with a price for what I do, but I sympathise with those that need to spend quite a bit ot time before they can come up with a price.

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Old 10-19-2006, 02:41 PM   #11
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Re: Estimates: Free Or Charge?


Almost every kitchen company here in Toronto charges. They all work as follows:
one initial visit, then the basic design and price. They will meet with you a second time, but will not leave the plan or specs with you unless you give them a deposit for the job.

Most professional landscape construction companies charge for their plans.

Almost no deck companies charge anything. They'll go, give the quote and plan, and leave it physically with the customer.

That's why I can't get paid for my estimates!
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Old 10-19-2006, 04:10 PM   #12
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Re: Estimates: Free Or Charge?


Quote:
Originally Posted by ProWallGuy View Post
Example, you win 1 out of 3 bids. The cost to win that job was (average of $150-$450 = say $300) so $300 X 3 = $900. It cost you $900 to land that job. Fit that $900 into the cost of that job.
I'm not disagreeing with this, but let's think about this for a second.

Essentially, aren't you punishing the customer who decided to spend their money with you, in order to not offend the people who are wasting your time?
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Old 10-19-2006, 06:18 PM   #13
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Re: Estimates: Free Or Charge?


Mahlere, Each customer is charged labor-material-overhead-profit.
You job cost (cost to aquire)is part of your overhead and needs to be charged or it has to come out of your profit. If you average your lead cost and figure an average closing rate you will get your job cost.

There are times when you might run 6 leads without getting a job, you do not try to charge the 7th lead this overhead. The averages will work out hopefully or time to look in the mirror.
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Old 10-19-2006, 06:52 PM   #14
 
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Re: Estimates: Free Or Charge?


Thanks for the replies guys, I will give it some more thought, I like the $1.00 idea. Basicaly my theory was a token charge will:
A) Make people stop and think "do we want to spend $$ just to see how much something would cost"
B) Make people realize that our time is worth money.
well thanks any more thoughts would be appreciated.
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Old 10-19-2006, 07:16 PM   #15
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Re: Estimates: Free Or Charge?


Quote:
Originally Posted by C.C.R. View Post
Thanks for the replies guys, I will give it some more thought, I like the $1.00 idea. Basicaly my theory was a token charge will:
A) Make people stop and think "do we want to spend $$ just to see how much something would cost"
B) Make people realize that our time is worth money.
well thanks any more thoughts would be appreciated.
It costs $50.00 to fill up a gas tank. Dinner & a movie cost $100, do you really think charging somebody $1.00 is going to pre-qualify your customers?
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Old 10-19-2006, 07:55 PM   #16
 
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Re: Estimates: Free Or Charge?


Would any of us pay someone to come out and give us price for something we needed done that we couldn't do ourselves?

Why do we expect others to do what we would not?

Your best bet is to qualify over the phone. Give them an idea of project cost. For instance, if they have a 5x8 hall bath that needs a complete gut, tell them the last one you did that size cost 8,500.00.

That at least gives the homeowner an idea of what to expect. If they thought their bath was going to cost 4,000.00, then you only wasted a few minutes in the phone.

If they are OK with that, make an appointment and give accurate price for the work.

You will eliminate many wasted hours this way.
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Old 10-19-2006, 09:42 PM   #17
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Re: Estimates: Free Or Charge?


Quote:
Originally Posted by Mike Finley View Post
It costs $50.00 to fill up a gas tank. Dinner & a movie cost $100, do you really think charging somebody $1.00 is going to pre-qualify your customers?

I don't use the $1 to pre-qualify. I use it to get rid of the tire kickers. If they can't be bothered to spend $1 to get me to come over there I don't want to go there anyway. I'm sure the homeowner knows what the price of gas is and I'm sure they know that it will get you about 8 miles down the road. It is just something for them to think about, "Do I really want to have someone come by to look at this?" If you balk at putting up a $1 what are you going to do when I tell you your project is going to be $10K, $50K? All I know is it works for me.
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Old 10-19-2006, 09:47 PM   #18
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Re: Estimates: Free Or Charge?


A dollar must be worth more in CT than it is here.
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Old 10-19-2006, 10:32 PM   #19
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Re: Estimates: Free Or Charge?


I don't know, it must be just me.

If somebody caught me on the wrong day and told me they charge $1 for an estimate, he's liable to have me have him come out and I'll figure out how to get him to run up and down a ladder a few times, crawl around in the dirt in a crawl space, then climb into the hot attic for a few minutes, and when he is ready to hand me his estimate, that's when I would tell him to never mind, keep it, I changed my mind, but here's your buck, thanks for the fun, the best dollar I ever spent.
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Old 10-19-2006, 10:35 PM   #20
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Re: Estimates: Free Or Charge?


I don't charge for estimates - ever. I figure its part of the business. As a matter of fact , I feel feel that my 'hands on' attention differentiates me from the other guys, I am happy to do 4 -5 visits with the customer to get the job. I will even do some prelim drawings at no charge... My closing rate though, is 80%. In a wealthy area like mine, it is the little things that make the difference. People like attention and being made 'special'. That is what I try to do, plain and simple, and it works for me. But I am in a special area (I don't take work more than 2 miles away).....................

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