BIG MISTAKE-Fee's for estimates

Unknown

OR IS IT?  I THINK NOT. AND HERE IS WHY...

After reading a few articles on the subject, I recently had the idea to offer free consultations instead of estimates.  My general process is to visit a prospective client who has an interest in installing a heating and/or cooling system Then, through a discusion of varying legnths, I identify what the customer generally wants in terms of system type. As we have this discussion I explain the benefits of dealing with our company and how we do things different than the others.  IE we are high quality, not high volume, and therefore we Gaurantee our work to a higher standard.  When the customer asks for a price I simply give them a basic range. Say 8-10,000 for central air complete install.  I then explain that in order to Gaurantee our work we neeed to do a somewhat extensive heat loss heat gain calculation and design a basic blueprint as to how the system will be installed.  IE system sizing vs expectations, register locations, duct sizes and materials, etc etc.  Then I pop the questioin. I ask them If they would like me to get started to on this process during todays visit.  If they say yes, I explain to them that we have a minimum $150 design fee.  After there jaw drops, I tell them that is all part of our final price and that they it would be discounted from our estimate.  And to boot they would have a professional design which would act as a standard during there bidding process. And I explain the fact that if they are serious about moving forward with this project EVERY contractor should be offering this to you.  If they choose one of our competitors simply tell them to give you a $150 discount and they got the job.( after all they are high volume low price guys? Right?)  We Gaurantee our design and  there satisfaction if they choose our bid.  If not, no Gaurantee and we keep the $150.  Believe me my fellow contractors, it really weeds out the tire kickers.  It also sheds a light on many of the unknown factors an install "like this" may entail without proper engineering.  My first question over the phone to a prospective install client is ALWAYS, "Have you had a professional design done for this project yet?"  Almost always they will reluctantly answer, in an unsure and utterly confused manner,"NO!"

Please offer any and all feed back about this writing!

Thanks, Mike F.

icesailor

Fee/Free Estimates:

Years ago, I read an article in a trade magazine about this. I liked it.

To separate the tire kickers and price shoppers from the vast masses, this contractor, offered "Free Estimates". When he went to give his "Free Estimate", he gave a Free Estimate (on a say, $10,000. job) of between $1000 and $20,000 for the job. That was the "Free Estimate". For the true value of the job, he charged $XXX. for the quote for the job which would be included in the price if he got the job. To give an accurate price on doing the job required a lot of time and careful planning. He pointed out to the potential client that if another contractor told him that they would do it for $XXX less than the lowest bidder, that was why he charged for his proposals. That was the carefully considered price for the job and was given with his years of experience. That the Low Ball contractor was just using the prices of others to figure the job.

He claimed to have good luck with the concept.

Where I work, there was an electrician that always did the work of a builder who was known for slow pay and beating up subs. No matter how hard anyone tried to get jobs with this contractor, the electrician always did the job. After years, the electrician asked another respected electrician, how he could always bid jobs so low? That in order to get the jobs, he kept having to cut his prices to keep getting the work of this builder/contractor. To which the losing bidder/electrician replied, (Name), I have never in all my time in business EVER given that slug a price and I would go out of business before I ever did. He's been telling you that for all those years to get you to drop your price.

A lot of contractors I see are just used car salesmen who took construction management in college and are now experts in construction.

Like the one where I work who is the Geo-Thermal Go-To guy for quality installs. Gets all his water PEX from that supply place and the systems have all rotted out from iron circulators and iron pipes with their non O2 barrier tube.

CMadatMe

Estimates are Free Exacts Cost Money

I applaude your stance and the way you conduct your business. What you are doing is what separates the Pro such as yourself from the competition. Your showing the customer that you hold to the standards that every contractor should be holding too.





Your expertise, time and willingness to give your customers the proper sized and designed system is worth the money you charge. Keep up the great work. I preach your reality to every contractor I cross but most are scared that if they don't offer FREE estimates they won't get the work. But they have lost there way. The have turned the definition of estimate to the definition of exact.

Charlie from wmass

I have found

Many people want me to give them a free estimate to just get a free guide on how to repair their boiler. They get my estimate and try to get their guy to do this work for their going rate. 

lchmb

estimates

Why not charge them for your estimate (small fee), and then charge them for the entire heat loss (large fee) if they want the break down? Would seem that if you do the heat loss and they run to someone else to install it, and it then has problem's that they would try to blame you.

clammy

gotta agree with charlie

In my experences at least in my area and the ecomony being what it is i some times feel like a car in a auto lot with my tires getting kicked over and over  and then usuallly the schrader valve is removed after you find out some one else is doing the job and you where just a informate .When i really get a chain jerker now andthen and  realize it i just give it back to them and give loads of misinfromation espically when they are contractors ,Home owner don't much bother me i already know what else is out there and ya get what you pay for so effum they are the one who will live with there mistakes' I don't charge for a estimate but if they want  a heat lose ,piping diagrams  and or control set up you pay it is only fair .I do charge for look see s at promblem job can't do it for free but usually it's to the HO's advantage   peace and good luck clammy

icesailor

Estimates:

Clammy,

If you take your experience and artistic talents, and make a drawing of how you will do a job, it has a certain amount of intellectual property rights that YOU own. If an artist makes a drawing and you copy it and don't give the original artist credit for the drawing, you violated intellectual property rights. If you draw it, you own it. It is your idea. I have gotten plans from designers with notices on the plans about intellectual property rights.

You might want to look into this.

heatboy

First visit is always free.......

The only way I can get a perspective client to hire me is to visit with them about their project.  They have to get to know me and what it is I can do for them.  On the initial phone call, I try to set up a (no charge) visit and do let them know that if we get to the point where they are interested in me, there will be monies needed for actual design service.



Sure, there is my time involved for my visit, which I will not be compensated for, but it's all part of the process.  The advantage to this is while they are sizing me up, I am doing the exact same thing to them.  From that point on, my little voice takes over.  :-)  I shop for clients just like people shop for contractors.

Paul Pollets

Professional fees

Charging a fee for services is professional, and usually results in a higher closing rate. I've never heard of going to a doctor's office or a lawyer for advice or treatment without paying.  If a prospect wants expertise, show them your stuff! We always do a heat loss when retained, never for free or as a "loss leader".  The customer should have a good idea over the phone that you are qualified, and can prove it.



I'd like to know how many contractors show up at a prospect's residence without a "brag book" of photos showing the range of projects completed and demonstrating their skills?



If you're time is valued, the time spent in front of a prospect has a value and should be considered as part of the billable hour. Giving it away lowers the bar and turns the industry into a commodity, which it largely is already. Unfortunately, the lack of sales training amongst contractors is a huge factor. I feel the argument that "the economy is so bad, we can't charge', reinforces the urge to shop and find the lowest price. We always discount the fee from the contract price, if retained. That makes the customer realize the value in the service.  Customers tend to call back when a fee is charged for a proposal, they never call back when it is for free.

Brad White

Not to tag on

or hijack this thread, but I have a similar experience and perspective. I do not install anything, but rather design and consult. (This being a nights/weekends endeavor separate from my day job engineering larger projects). My focus is on residential energy conservation, building enclosure evaluation and improvement and HVAC consulting in general.



Oftentimes I get referrals from a local building materials cooperative. Great folks and 90% of the time it is a short e-mail and phone conversation to help them determine if they are on the right track, that of the three estimates they have, so and so was a better value or a general path or best approach from a cross-roads. Easy, no charge, happy to do it.



Lately it seems I am getting not tire-kickers but similar referrals where I see it being more involved. The first consult, a nominal hour, phone call or e-mail is at no charge, so when they come back for more information, I tell them my hourly fee (including discount for being a member of said co-op). Sometimes I send them a services menu with ranges of time/cost for specific tasks, such as heat loss calculations (block or room by room), blower door testing with and without IR thermography, etc. With each service is a "values and benefits" statement, what each report, test or task adds to their overall goals.



But what it is about this group is, they do not seem to acknowledge nor value (or not see the value) or my time.  Some have acknowledged receipt and say "ok" but then seem to balk in subtle ways. One wrote after a half-dozen back and forth (and informative if I do say so), e-mails. He said, "I do not want you to do any actual work...." implying, "do not start the billing clock".  This person obviously does not understand that my time is valuable and time given to him comes at the expense of those who actually pay my bills. Basically he got, for my reluctance to make an issue of it, enough of my services to serve his needs. I may just send this one a bill for his arrogance.



He is but one, I have had several in as many months. One told me that, "contractors do what I do for free",  (implying that for some reason, I should?). Others, once they find out I charge, even with the discount, I never hear from them again. No problem.



Not meaning to rant, but am wondering is it the economic climate, my local community attitude or my not explaining what it is I do and the value I add, well enough?

rlaggren

heatboy's got a point

You need to see the job and talk to the guy before any thing at all becomes possible. "Free" meeting makes a LOT more sense to any customer than anything that can appear to require him to "prepay" on something he doesn't really understand. The important thing is to manage your first 20 minutes to half hour so you can check him out and give your best solid pitch - and then walk away "on time" if it doesn't cross the strike zone. "On time" means you give him the time you have decided is your best investment in a potential job - and no more. You validate the customer a little on the phone so he knows what to expect and you don't waste time on obvious dead ends.



 > climate... attitude... not explaining...



Brad, I hesitate to give advice because you're well into grown-up. But your post kinda resonates. If this is all old hat, please don't take it wrong.



How about all three of the above? But your part's you have control of. You have a very organized, carefully honed set of high end skills and procedures while the "community" has an amorphous set of low end needs (at least what they perceive). Your mission, should you choose to accept it, is to package yourself and your skills in a way that they see a value to their particular needs and you get something satisfactory from it. Depending, this may be impossible, challenging or merely a bit of effort.



If people start out thinking of you as a good hearted helpful guy they have a hard time transitioning to paying you. So you cannot afford to start out as a good guy - right from the first word you're another professional calling to see if they have any business for you. That means you need to make up a short simple explanation of "Brad LLC" and a short (less than three to keep it easy and clear) list of "products" you'd like to sell them. You might want to hone your presentation on the guys who "refer" you - that might solve a lot of the problem; after all, in these times you gotta charge for your time and you appreciate...etc. That should eliminate 80% of the (non)-customers in less than 10 minutes each. It'll also force you to hash out clearly for yourself and them exactly what you offer on what terms and some ideas on how it might benefit them. Gotta find a formal dance where your skills and methods match their needs and interests.



Depending on the community, there may be no way. Occasionally I've done a complementary good will or charity gesture - after making it clearly understood that my business model did not fit here but as a courtesy I would tighten the old lady's faucet stem nut or whatever. And that we had no business relationship and they would have to look elsewhere. It sounds like that may be the case for some of your community.



FWIW.  Rufus

Brad White

Thanks, Rufus

Everything you noted is true or has been at one time or another!

Yes, it is a community and true, my "holy trinity of what ifs" are not mutually exclusive. In fact, I think they meet up, hook up and start to breed.



Excellent point you made, "You have a very organized, carefully honed set of high end skills and

procedures while the "community" has an amorphous set of low end needs

(at least what they perceive)".



Funny, the client base are highly educated and the ones that went to Harvard work that into the first paragraph at some point, almost without exception. Not to generalize, when it comes time to pony up, they either choke or pay then list five things they thought I did wrong. Sigh.



Well, I am pretty good at filtering, doing pro-bono work in good faith. Just need better Paydar to find sooner the ones extending my good will to their conclusive needs!



None of what you said was taken the wrong way but I appreciate the gentle way you couched that just the same. Very much appreciated!



Brad

rlaggren

The end user

Has a very narrow experience with his technology and knows what he wants. The equipment manager has relatively broad experience and knows what it takes.



At a guess you are used to dealing with managers - wholesale vs. retail. The retail customer needs a different approach. Some good things and some bad about it.



Rufus