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Building Business

Building Business

How to Drum Up More Remodeling Business -- Should I Pay to Estimate?

comments (14) January 3rd, 2011 in Blogs
ScottG Scott Gibson, contributing writer

Giving free estimates in hopes of attracting new customers is one conventional approach of expanding work opportunities, but Oak River Mike wonders whether that tradition could be turned on its head.

"Has anyone ever worked up a way to offer to pay the potential client to give them an estimate?" he asks. It sounds far fetched, he admits, but offering a $50 gift card, or even $50 in cash, just for the opportunity to give a bid to a potential customer might mean new business.

"I realize there is alot to work out on this process but I am open to think about it," Mike writes in a post in the Breaktime business forum. "With what I am spending on other ad sources with very little return, I might be more open to at least paying the person I want to work for as opposed to a third party who doesn't care whether I get the job or not as long as they get their money."

What kind of customers are you likely to get?

Thinking outside the box takes courage and imagination, yet several posters weren't convinced this idea holds a lot of promise.

"Excellent way of immediately narrowing down your leads to price shoppers," replies Carpeater. "And that's if they really have a project and budget in mind in the first place."

"I see all the time offers from roofers and the like that they'll give you a certificate for a free box of steaks or some such in exchange for letting them do their pitch," adds DanH. "Generally smells a little bit to me (even if the steaks are fresh)."

And this footnote from Carpeater: "Send me a $25 gift certificate and I'll email you the specs for an addition that I never plan to build. If I find two other bidder to do the same I can take the wife out to a nice dinner.

"Just sounds crazy to me," he says. "Maybe a "$100 gift certificate for every signed contract. Remember, don't give the coupon until AFTER signing the contract! That's as far as I'd think of going."

And finally this from Florida: "We used to have a remodeler here who did something pretty close to what you're describing. It was always something different, free steak knives this week, weekend cruise the next followed by a genuine grandfather clock. They were very hard sell, had a terrible reputation, went through qualifiers like cheap candy and eventually went out of business."

Actually, Oak River Mike says, the idea of payiing for the chance to give an estimate is a followup to something he tried earlier. He sent out $10 Starbucks gifts cards to 50 local architects. Meet with us to discuss potential work, he told them, and we'll pick up the tab while you get to keep the gift card for future use.

"Out of 50 we sent out, TWO called us to thank us and ONE actually wanted to meet," Mike says. "More out of the box thinking but it didn't really work all that well."

Try door-hangers

Hazlett has another idea: walk through a carefully selected neighborhood and hang advertising brochures on door knobs.

He gets roughly three calls for estimates for every 200 hangers he distributes, and of those he ends up with a paying job about 50% of the time.

Hazlett is careful to stay off of homeowners' lawns, won't walk up to people he finds at home ("because I hate it when people bother ME at home"), and chooses his target neighborhoods with care.

"I want neighborhoods where the husband and wife are both working, Volvo= disposable income-but not too much," he says. "I want houses pre-WWII, mature landscaping, nice lawns, well maintained -and if possible Monday morning is THE ideal time to hang them."

Hazlett hasn't been using this approach long enough to know exactly how it will work out, but after working primarily in his own neighborhood for more than 20 years, he's looking for a way to branch out to serve a bigger area. He's even considered hiring someone to hang flyers for him on a part time basis, providing he could find someone reliable who could work independently.

He's also in the process of tracking down a service that for $45 will print and mail promotional material to the 50 closest homeowners to any specified address. So, he says, "I do a project at 1680 Brown Street--and for $45 I get a custom mailer sent out to the 50 closest homeowners."

Use an open house to draw potential customers

While Txlandlord, who owns a design/build company, doesn't think flyers would work in his situation, holding an open house in a recently completed project might.

His company designed and built three "very nice homes." He approached the homeowners and asked if he could host an open house before they moved in, in each case offering some credits toward costs.

"The clients were more that willing, and one stayed at the home helping us with the avalanche of visitors," Txlandlord says. "All three Open Houses were successful. We ask visitors to provide contact info, and indicate areas of interest (new home / plan work / finding lot). The card doubles as a drawing entry for a $100.00 gift certificate to a very popular gourmet Mexican restaurant."

Txlandlord follows up with emails "before the more invasive phone all."

"The key is advertising in advance," Txlandlord adds. "We ran ads in newspapers in a 45-mile radius, and the last time we bought radio time on a local station. We start advertising two weeks before the event. We also must be willing to work on a Saturday and Sunday at the Open House. The Chamber of Commerce also helped us in promotion of the events."

The company ended up sinking several thousand dollars into the events, but the three open houses so far have generated $1.7 million in projects "with at least 10 inquiries from people who plan to build in a year or two."





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Comments (14)

getyourhandsdirty getyourhandsdirty writes: Randall you sound condescending, sarcastic and angry. I think homeowners should pay for estimates. Although in my market I do believe that is not possible. I do give contractors credit for looking for creative ways to bring in business. We are in a recession and many contractors just like many Americans (consumers)are desperate. I would not pay customers to give them an estimate.

Why is 2/3rds the average estimate the correct amount to pay?
This seems arbitrary. Is it possible the hights bidder is in fact the best. Some customers are happy to pay for the best. Others will always seek the cheapest contractor. Most are somewhere in between. Sometimes one can find a good contractor with low prices. That contractor may have a lower overhead than the one that charges more. Purchasing a new truck does not mean a contractor has high prices. With depreciation,dealer incentives and write offs for new equipment, a new truck may make more sense than a used one.
I have never heard of a contractor asking a customer to come up with drawings and dimensions. Those things should be left to the professional. #11 is simply not true. A contractor is always responsible for the work they perform. No matter who pulls the permit. I have been a remodeler for almost thirty years. If a contractor shows that they have integrity. And they do what they say they will do, the contractor will get referrals. A contractor will still need to market themselves. And there are no golden eggs. However the consumer is turning to the internet for their consumer needs. And construction is no exception.
Posted: 11:07 pm on February 5th

RandallS RandallS writes: I am a homeowner reading FH for information as we approach committing to a mechanical room and heating system.

These are my impressions as a soon to be customer.

I am not a contractor. I work in enginering at a university.

1. Never pay me or compensate me in any way for an estimate. I will immediately believe you are desperate and will probably cut corners on quality. There is absolutely no way I would ever consider hiring a contractor i believe is that desperate.
2. I would consider paying for an estimate if the fee were reasonable, like maybe $30.00 for a 30 minute visit, especially if the fee were guaranteed in writing to be subtracted from the project's total cost if I committ to you. I know company operating expenses are well over $60.00/hour but there is no way I will pay $100.00+ for an estimate. Too many contractors offer free estiamtes. If you don't want to do that then you need to organize so no one does it.
3. It is true that by receiving multiple estimates, at least three, I will pick up some significant knowledge on how the project can be/will be done. But, I don't wnat to do it. This is why I want to hire you. More importantly, these estimate visits is the way I gauge credibility, how honest and open the contractor is with me or if he is trying to snow me with a lot of professional, selling pressure, BS. It also allows me to sense credibility and knowledge and how the project will actually be accomplished. Little details like fastening schedules or how pipes are routed can reveal a lot about quality work and shortcuts that are not good and can make or break a potential contract.
4. I always commit to the contractor who submits an estimate that is 2/3 to 3/4 of the highest one I receive unless it is so high it is completely unrealistic. This way I hire someone who will do quality work at a reasonable price.
5. Never casually swear or use foul language in the context of general conversation. It conveys an instantaneous negative and low class impression.
6. Don't arrive in a brand new $65,000 one ton GMC dually diesel. One look at that and I know I can't afford you.
7. Tell me right up front on the phone that you will need sketches or simple drawings with some basic measurements and window/door locations of what we want. Then we will not waste time measuring and discussing details that should already be thought out. In all fairness it is an estimate session not a planning session.
8. Don't ask to borrow my plans, if I have some, and then never return them.
9. Do not ever require me to pay 1/3 of the estimated cost before work begins. Credible contractors do not do this. I will instantly be suspicious of your ability to complete the project if you can't even buy material or pay your help unless I advance you what is in effect, a free, short term loan, with zero guarantee I will see you again. I use an escrow account with fund releases as work is completed or will pay the full amount when the final inspection is approved.
10. Do not tell me you are insured if you are not. I will always ask to be included on your liability insurance as a named insured, which is a free service your insurance company will provide you. It protects me in the event one of your workers is injured on my property. Use that as a sales tool. It works.
11. Do not ask me if I want to get the permit, or tell me I have to. I already know that if I get the permit then I am fully responsible for any problems with the job, or the inspectors, or the health department, etc. Don't even try that one. Just tell me you will get it and it is okay to include a fee for that service.
12. Do not start the job and then leave for a week to work on another job and tell me you will return in a few days. Start the job and stay with it until is is done.

So there you have my impressions as a possible future customer. I hope it helps. It is not meant to be negative but to illustrate part of what I have learned the hard way in hiring contractors. Remember, credibility everything.

Posted: 10:17 pm on February 17th

jhkconst jhkconst writes: It seems to me that this is all about integrity and ethics! Who ever started free estimating should be shot. It is a professional service and the potenial client uses it for making an educated decision and compares and or uses your information to decide to move forward with a project. This is hard earned information that should be charged for just like any other professional would. Problem is that the industry has sort of dictated what or how we do this...we need to all try and change this...don't you think? On major project estimates I do charge for least I re-coup some of the expense of time that I have already put into it. I would never pay someone to give them a only cheapens who you are and what you do.
Posted: 3:38 pm on February 10th

richard904 richard904 writes: As a homeowner trying to get various projects done, I would never accept money from the potential contractor for an estimate or proposal. I am trying to determine the legitimacy of the contractor - what is the quality of work, can he follow a schedule and budget, does he have an aura of integrity, etc. If an intricate bid is required and if travel time is required, then I would be willing to pay for the time used. In most projects that part may be a small per cent of the total cost. I think it is a very bad idea for a quality contractor to kick back cash or payola to a potential customer. It has such a bad "feel" to me. Also, let me add in this economy there are moral and ethical issues. Since I am not a lawyer, I do not like to put the squeeze on contractors who themselves are trying to make a living and have a family to support, although I have known many lawyers and others who delight in doing this.
Posted: 6:14 pm on February 7th

scottsather scottsather writes: I have increased my prices and work has increased as well. If you lower your prices or give anything away, your quality is lowered and so will your client base. I have made it a point to do quality work and keep a very high standard for my company. I have won several jobs with guys bidding 1/2 my asking price because the quality customers knows cutting prices cuts into quality always. Spend time hiring more skilled professional workers and you can usually get better work from one quality craftsman than 3 hammer heads. Customers will appreciate this as well. Times are tough so can the slacker no skilled saw bum and hire or train the rights guys. The up side of a slow economy is the skilled guys are plentiful now, use this time to prepare for the upswing (it's coming and sooner than you might think).
Posted: 10:03 pm on January 25th

FASTRC5 FASTRC5 writes: I am a home owner/designer, having just gone through the bidding process on a significant second story addition first floor gut and remodel.

I am surprised that no one has mentioned the internet. I went into this project knowing no one who had done this major a renovation so no referrals. I was not going to call someone from a door hanger advertising sun rooms and gutters. Randomly calling builders listed in the phone book seamed a poor strategy. I posted my project on a website (sorry no plug here).

After receiving about a half dozen requests to quote the job, I replied back with images of the initial plans/layout 3d rendering siding choice roofing windows etc. I did not pay for any quotes (and would not if asked). The decision came down to who I thought best understood and could execute the design. This was apparent in the quote. How many builders follow up with customers on why they did not get the job, or ask why they did? The assumption I think in general is that some cut rate builder under bid them. It could be that out of 4 quotes you were 40% higher, You drove a Toyota Tundra to an autoworkers house in Detroit to quote. You could not show a portfolio of similar projects that cave the customer confidence that you could accomplish there goal.

All that said paying to give me a quote would just make me suspicious that your desperate, or that a coupon convinces me that you inflate your prices. I think customers are looking for someone who can move fast and be straight with them.
Posted: 3:41 pm on January 11th

tombijak tombijak writes: We're in the $500k range and only source of business is referrals-- through neighborhood listservs and past client referrals. My primary customer base is a relatively highly educated, middle-class suburb of Washington, DC. In all jobs I bid, whether competitive or directly negotiated, I include charges to cover my costs of planning materials/preparing cost estimates. When I sense or am directly informed that a prospect is getting multiple bids from contractors, I charge for my estimate-- typically several hundred dollars. Some prospects decline to pay for an estimate, but that's OK because if someone is concerned about paying for the work involved to prepare a realistic estimate, I probably wouldn't have gotten the job anyways-- I don't compete on cost. If I'm the successful bidder, I provide a credit for the amount of the estimate.
Posted: 1:48 pm on January 10th

nsricher nsricher writes: My particular beef is with Handy man builders and small remodlers (25 G to 500 G per year) who don't charge for design and planing, specifiying materials and fixtures or all the leg work involved in rounding up all that stuff. This practice is so prevalent the coustomers have come to expect these services as part of a Free estimate or part of getting the Hands on part of the job done. The result is that bids (even off the books bids) are unrealisticly low and the service and work provided is shoddy in the extreme.

NYCJames, it's bullshitters like you who make make my customers come back as I don't mind pricing things out and will give my estimates for free, as that is what it takes here to get a job. Consider yourself fortunate that you have work and I'm damn sure you didn't get to where you are by never compromising and doing "leg work". Your beef is with guys who make 25 to 500 "G"? That is every builder I can think of these days.
Posted: 7:24 pm on January 9th

WallaWallaBuilder WallaWallaBuilder writes: I have no quarrel with a guy who has a lower price than I do...he knows better than anyone what his product is worth.
Posted: 8:46 pm on January 8th

EGHMS EGHMS writes: I am convinced you don’t need to be the cheapest guy in town. Yet you do need to be a bit sharper. I agree with the idea of offering some incentive for the potential customer to call me back. I have never had much luck with door hangers, or ads in the paper. When I do a remodel I like to send a letter to the next door neighbors letting them know we will be doing work. And to call me if they have any concerns or questions. I have literally worked my way down streets with this approach. Another is to offer discounts on a sliding scale "spend 1000.00, get 100.00 off" I also have made up nice quality sweat shirts and t-shirts that I send to the customers after completion.
Posted: 6:48 pm on January 7th

jeannene jeannene writes: As a homeowner, I would be more open to do "sweat equity" on the smaller parts of projects to save money. I would be suspicious if someone wanted to pay me to give me an estimate. I would wonder what is wrong that they feel a need to do this.
Posted: 3:43 pm on January 7th

Steveocs Steveocs writes: It's ridiculous to pay someone for an estimate all you'll get is lowball low quality pricers who don't give a darn about actually getting the work done unless you don't want a profit. In this economy there are too many home owners present or future who think nothing of the contractor making a profit. Were in the construction industry so they feel we must be dummies.
Posted: 12:01 pm on January 6th

NYCJames NYCJames writes: What ever marketing stategy a builder uses is up to him but marketing should not be about givng away service beyond what the builder can afford to give away. In order to avoid confusion between Proffessional service and materials that the customer will be expected to pay for when and if they contract with him it seems best to offer a credit towards a an agreed contract or some small gift like the starbucks card that is totally unrelated to the products and services that will eventually be contracted.

My particular beef is with Handy man builders and small remodlers (25 G to 500 G per year) who don't charge for design and planing, specifiying materials and fixtures or all the leg work involved in rounding up all that stuff. This practice is so prevalent the coustomers have come to expect these services as part of a Free estimate or part of getting the Hands on part of the job done. The result is that bids (even off the books bids) are unrealisticly low and the service and work provided is shoddy in the extreme.
Posted: 8:09 am on January 5th

denshandyman denshandyman writes: I hate to be the Devil’s advocate so I won’t. Doing the best job I can and treating each customer as if they were number one, has lead to referral after referral. A good reputation and customer service can go a long way to building a successful business. A better way to get solid referrals is to reward the referring customer. I too have spent money on advertising and might as well have flushed the money down the toilet.
Posted: 9:30 pm on January 4th

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