Most companies now are involved with many more small projects and most probably spend time prequalifying these small-job prospects.
We recently reviewed our 2010 sales calls and determined that each miscellaneous or filler remodeling project — moving a few walls, installing new counter tops, replacing windows — required an average of two hours of time and cost the company about $46 in payroll dollars alone. Add to that: gas, vehicle wear and tear, office overhead, and time lost that could have been devoted to profitable job pursuits, and the price shoots up. We did not get hired for 62 of the 119 small job sales calls we went to in 2010. If the total cost to us was $100 per sales call, those missed opportunities were a $6,200 loss. That may not sound like much, but multiply that by the 22 years we’ve been in business and, well, you get the point. These home visits were — in industry parlance — “free estimates.” How I hate those words.
Time Has Value
We now charge a cost analysis fee for small-project estimates. When a prospect phones us to set an appointment, we explain that there will be a charge to cover our estimating procedures and travel time. We ask if that’s OK and if they’re still interested in setting the appointment.
It has been a good move for us to do this, and customers have accepted it. After gently explaining that we need to be able to recoup estimating expenses, prospects — even those who decline — seem to understand about paying someone to work.
How many years have you worked for free? How many more do you plan to give away? Most companies include an estimating charge in their proposals, but that’s only recouped if the job is awarded to your company. It’s time to dispel the free-estimate myth and charge an up-front fee for small-project proposals. Let’s get off the “free estimate” bandwagon.
—Kathy Shertzer has been the office manager/gatekeeper for DuKate Fine Remodeling, in Franklin, Ind., for 11 years. She has a regular blog at Remodeling Online.
Read more Kathy Shertzer opinions here.