Should Builders Provide Free Estimates?
Estimate, quote, or proposal? It depends on the scope of the job.
Providing “free estimates” has long been part of the building trades, covering everything from paving a driveway to replacing a roof. A customer calls, the contractor responds. Whatever time the contractor invests in coming up with the estimate is considered part of the cost of doing business.
Or is it? An online poster called “Ccmorical” isn’t so sure the practice makes much sense.
“Why does the remodeling industry believe it must offer free estimates?” Ccmorical asks in a post in the Breaktime Business forum. “When I do a call for an addition, I probably spend at least a day making the call, working with the owner on design issues, measuring, sketching, researching, estimating, proposing, and presenting. All with the hope they use me instead of taking my hard work and giving it to some other company. It probably cost me a few hundred bucks. What do you think? We need to start charging for our services.”
Charge a fee for providing an estimate
Mike Smith is one builder who isn’t enamored with providing free estimates.
“I qualify the leads and inquiries over the phone,” he writes. “Most of the time I will meet with the propsect, listen to their needs … explain what we can do. Since we’re ‘design/build,’ I offer to do the design for a fee. If they already have a plan and specs, I offer to prepare a proposal … for a fee. If they pay the fee, they will probably hire us to do the work. If they don’t pay the fee, that’s my out to move on.”
“Anything that requires estimating, pricing and written proposals has a fee attached,” he adds. “It sure eliminates the tire kickers.”
Another way of approaching it, Mike Smith says, is to stop calling them “estimates” and start calling them “proposals.”
“Guesses are FREE,” he writes. “Tell them if they want a PROPOSAL you have to charge to prepare it. A proposal means you’re going to bet the ranch … there are only three possible results when you offer a proposal if they accept it … you will make money, you will lose money or you’ll break even … the last two are not why you’re in business.”
CCmorical sometimes meets four or five people in a day, he tells Mike, and he needs a way of discovering early in the process whether a potential client is worth the time and effort that will go into preparing an estimate.
“This is not being rude,” he adds. “It’s just good sales strategy. The only thing that really pays the bills is finding a way to get paid for what you do.”
If Ccmorical is meeting that many people in a day, DavidMeiland wonders whether he’s doing enough to screen potential clients.
“Meeting with four or five people per day, you’re not doing enough on the phone to figure out who is actually going to hire you, and who just wants a free consultation,” davidmeiland writes. “Do you ask them what their budget is? Do you ask them who else they are talking to? Do you ask them how they got your name? Where are these leads all coming from?”
It depends on the scope of the job
Tokyotank would take the middle ground, providing free estimates for small jobs but charging for big ones.
“It really depends on what the job is,” he writes. “If it is something like go out measure a roof, or install a new front door, or something minor as such we do not charge. However, if it is an addition and we are involved from its inception, well then you have much more time and people dedicated to only bidding that job, then yes you must be paid for your time.”
A major kitchen remodel or an addition could mean billing at least 40 hours, Tokyotank adds, to cover the time it takes to deal with sub-contractors, estimate materials, and deal with an architect or designer.
“I see no issue with charging for an estimate as these things don’t just magically come together by themselves,” he says. “Your time is your livelihood and you must be paid for it.”
Cfbrew2 agrees. An estimate that takes only a little bit of time should be free. When a builder takes several hours or even days to develop an estimate, a customer “can only expect a good estimate if you are compensated for your time.”
Providing estimates is part of the business
Tim, however, isn’t buying any of it, no matter how long it takes to come up with a price. Tim works as an engineer, not a contractor. But he says he also buys, sells and renovates residential property, so he’s used to working with a lot of contractors.
“Is there ANY industry where you can expect to get paid to propose your services?” he asks. “… An architect or an engineer or a design/build contractor, at least in this area (the Midwest) who would expect to get paid to spend their time to develop a proposal? Either a megalomaniac or a complete idiot. Finding, scoping and bidding jobs that you hope to win is part of the business. Most understand this is overhead.”
Tim would “never consider” paying someone for a bid. “If their time is so valuable (or if they are so inefficient or inexperienced) that I must pay them to market their company and capabilities to me, that would be a giant red flag. As a customer of contractors, there are far too many hungry competitors out there to consider paying for a bid/proposal.
“It would be a great way to develop some more free time,” he adds. “Maybe get some fishing done or work on that short game.”
Tim’s remarks have got Calvin seeing red.
“I’d never work for you,” Calvin writes. “I know I’m out of market to expect a customer to be overjoyed paying for such a thing. However, to develop a cost study for their benefit free of charge is not going to happen. My time is as valuable figuring as it is doing. I’m still here 40 years since I started. I offer a good service at a higher than usual for this area price.”
There are some sharp words, but Tim isn’t budging.
“Any professional contractors out there that would be surprised that bidding work to homeowners could be frustrating? Time consuming? Really? No one ever dealt with a developer using your number just to beat down the price of a ‘prefered’ provider?” Tim adds.
“It IS the nature of this industry and every other one where services are sold face to face and products are bid on a competitive basis. The time spend buying materials, commuting to the job site, bidding the jobs, creating the invoices, paying the invoices, managing employees, paying taxes, insurance and facilities, marketing, advertising, entertainment and meals, vehicle insurance and maintenance, legal and accouting fees, vacations, medical insurance and benefits, recruiting AND actual material/labor costs are all part of the mix that any successful business owner has to accommodate in their business model. If that includes time spent playing around here, good for them.
“I have yet to deal with a quality contractor of any trade that expected to paid for a proposal.”