Does Doing Freebies Get You More Work?

[aline]

I few weeks ago I bid on a job to upgrade a 125 amp service to 200 amps and install a new sub panel in the basement next to the existing panel.
This job was about as easy as they get. The home was only a few years old and the basement was unfinished and completely open.

Most service upgades I do are a lot more difficult and I try to get anywhere from $2,000 to $3,500 for them. Usually I don't get these unless they don't get other bids. I knew this one was going to be easy and I was hurting for work at the time so I gave what I thought was such a low price that I would be sure to get the job. My price was $1,300.

Later that week the guy called me back to say he had gone with someone else. The guy he went with was about the same price as me but he had a coupon for $50 off which made him a little lower than me. The company is a member of ESI so I was kind of shocked that they were so low. I thought these ESI companies were supposed to be on the upper end of the pricing not the lower end.

The reason the homeowner decided to get bids was because the first electrician that came out gave him a price of $1,900 and he thought that sounded high. He said he was going to use the first guy because he had went out on a Sunday and fixed an electrical problem on his mother's house and didn't charge her anything for the service. But after getting a quote of $1,900 he decided to get some more bids.

So when it came right down to it the free Sunday service call the guy did didn't help get him the job at all. The homeowner went with the lowest price and not with the guy that gave his mother a free sunday service call.

Sounds like it doesn't pay to do service calls for free in hopes of getting future work. I bet he wishes he had charge the little old lady for the service call now.

I still can't believe my low ball price got beat out by an ESI company with a $50 coupon. Bummer dude.

Oh well. I would have been lucky to make any money on that job anyway.
I know some guys would have been less than a $1,000 for this job.

Service upgrades are the one thing that homeowners, unlicensed electrical contractors and handymen can't or aren't willing to do and we're giving them away. Man electricians in my area sure like to work for nothing. Double bummer dude.

 

[bikeindy]

WOW. That homeowner is a dillweed. The only free work I do is when I give Gift certificates to organizations for something like 2 free hours of electrical work, like the church they have a silent auction and it raises money for them. So while it is me donating my time, the customer still paid for it. I have from time to time stopped and done some quick switch change or other simple service call for a really good customer at no charge if it was on my way home or I was in the neighborhood but that is rare.

 

[wawireguy]

Don't do free work unless it's family or close friends and you don't expect anything in return.

 

[dbuckley]

The guy with the freebiesw got first refusal, and came in with a bid higher than the HO was expecting. If he'd come in at your level, then the hands would have been shaken there and then.

The freebie got the EC in the door, after that, its the EC's to lose.

 

[Tiger Electrical]

The guy with the freebiesw got first refusal, and came in with a bid higher than the HO was expecting. If he'd come in at your level, then the hands would have been shaken there and then.

The freebie got the EC in the door, after that, its the EC's to lose.

IMO he would have got other bids at any price and gone with low bid. The free Sunday service call was generous and may have been profitable with a more appreciative client. Free work is pretty tough on a typically very slender profit percentage.

One way of looking at free work is if you have the typical 5% profit you work at cost for 20 days (a month) for every day of free work.

Dave

 

[ultramegabob]

the people that you bend over backwards for are the ones that screw you the hardest. If someone needs my services it costs what it costs, I will try to think of the most cost effective way to take care of them, but it will still cost what it costs, I have to make money or I cant pay my bills...

 

[tryinghard]

Does Doing Freebies Get You More Work?

Almost certainly, but are we in business to work or cause an income?

Gifts are like advertising; they should be budgeted, calculated, and controlled rather than randomly given.

 

[tonyou812]

the people that you bend over backwards for are the ones that screw you the hardest. If someone needs my services it costs what it costs, I will try to think of the most cost effective way to take care of them, but it will still cost what it costs, I have to make money or I cant pay my bills...

Couldn't agree more. people that are looking or expect free bees are usually not the customer you want. My favorite is when they say "if you give me a good price on this one Ill have a few other jobs later on".... yea right

 

[Lxnxjxhx]

I try to get at least 5 bids.
Usually there's a cluster in the middle so you know they're all bidding on the same thing. With prices being close I go with my impression of the company and person. The low guy and the high guy are usually out.

If you tell them in advance that you are getting other bids, the smile usually leaves their face.

There's not much correlation between price and quality, and sometimes the public is unpredictable.

 

[LarryFine]

My favorite is when they say "if you give me a good price on this one Ill have a few other jobs later on"

I've had that told to me many times, and I always say "When you call for those other jobs is when I'll be able to give you a discount."

One time, a customer said he would, he did, and I did. One time.

 

[aline]

I try to get at least 5 bids.
Usually there's a cluster in the middle so you know they're all bidding on the same thing. With prices being close I go with my impression of the company and person. The low guy and the high guy are usually out.

If you tell them in advance that you are getting other bids, the smile usually leaves their face.

There's not much correlation between price and quality, and sometimes the public is unpredictable.

This is why contractors should charge for estimates. It would limit the number of bids people get and increase the chances of getting the job.

Best Buy and Circuit City charge about $100 for estimates, then credit it towards the job if they get it. We should take a cue from them. Providing estimates is a valuable service. It's about time we started charging for them.

Would you still get at least 5 bids if you had to pay for them?

The reason the smile usually leaves their face is because they do these estimates for free and know when someone is getting at least 5 bids there odds of getting the job aren't that great. Some people will pick the lowest price, some will pick the highest price assuming the quality of work will be better, some will pick the guy right in the middle, some will pick the guy with the best personality and selling skills. It's a crap shoot.

 

[Lxnxjxhx]

5 bids

5 bids

Those who openly charge for estimates I don't go with, but I assume the cost of doing business is all in there, somewhere, for those who charge or don't charge for estimates.

I'm not sure about the odds. I don't think they are 1 in 5, and may, unfortunately, depend very little on how good you are at what you do.

The ones who charge for estimates are probably trying to weed out non-serious customers. It works as long as you also don't weed out "good" customers.

Every move has a countermove. It's "Game Theory", and some games are not solvable, like The Tragedy of the Commons.

By the way, I don't charge for estimates and I just underbid a job by a factor of three. I had data on similar jobs, but it turned out this job was not similar in very significant ways.
Anyway, the guy saw how hard I worked so he says he is willing to pay me for actual T & M. I think he feels guilty. This is one customer I want to hold onto, so I will probably cut him some breaks.
At the same time, I don't absolutely depend on doing home improvement work. Starving has a way of changing your outlook on things!

Yes, the people who say or imply that they will have more work for you to do in the future, depending on the price you charge today, are about as credible as a politician, maybe less so.
For you financial guys, it's the Present Value of a Future Payment or Future Annuity, and you can calculate what this vague promise is worth in Today's Dollars. Don't forget to adjust for inflation.

Anyone out there want to buy the Brooklyn Bridge from me? Special price now in effect!

 

[ITO]

I try to get at least 5 bids.
Usually there's a cluster in the middle so you know they're all bidding on the same thing. With prices being close I go with my impression of the company and person. The low guy and the high guy are usually out.

If you tell them in advance that you are getting other bids, the smile usually leaves their face.

There's not much correlation between price and quality, and sometimes the public is unpredictable.

5 bids for a service call? I would not waste my time returning your phone call. Go play your game with some poor fool who does not know any better.

 

[Tiger Electrical]

I can't believe I have to lay this out for you, but if five contractors are called and drive out to talk with you about your project and you hire one of them their odds of getting the job are 1 in 5. Those odds are skewed by price and presentation. If a hypnotic super-salesperson is one of the five, the odds will be miserable for the other four (repeatedly). IMO you have to have super sales skills to play the game. The contractors getting work on low price are losing money. If they are running free estimates to get low-bid work, they're losing even more money.

Dave

 

[480sparky]

There's only two places I do free work: One is a non-profit organization I belong to, and the other is Mom & Dad's house.

I understand trying to cover your expenses by charging a c-note just for an estimate, but as soon as I do that, I'll be sitting on my thumbs all day after the prospective customers hang up on me.

I assign a PO to every job I get called about. I track my hours according to those POs. So at the end of the year, I can calculate how many hours I spent estimating jobs I didn't get, and can work that into my budget for next year. It may seem to be wasteful, but it's a cost of doing business, and there's no reason you can't figure that cost into the jobs you do get.

Bob & Carol & Ted may not pay me for the estimates I give them, but Alice will.

 

[Tiger Electrical]

Of course your paying clients pay for everything. It just seems wrong that the people who hire you pay for the estimate (4x), while the people who don't hire you get the estimate for free.

Dave

 

[480sparky]

Of course your paying clients pay for everything. It just seems wrong that the people who hire you pay for the estimate (4x), while the people who don't hire you get the estimate for free.

Dave

How much money does Carl the Con Man make if I go down to the auto dealer and kick some tires?

Ever get on the phone and start calling insurance agents to compare premiums?

And I know we've all done this one: Fax a materials list to 3 supply houses, asking for a price. But only one is going to sell you the stuff.

You may think it's wrong, or it may rub you the wrong way, but it's called Free Enterprise.

 

[petersonra]

There's not much correlation between price and quality

Absolutely right.

 

[Rewire]

Joe Customer makes two calls and one offers a "free" estimate and one wants a charge who do you think he gets to come out?

 

[satcom]

How much money does Carl the Con Man make if I go down to the auto dealer and kick some tires?

Ever get on the phone and start calling insurance agents to compare premiums?

And I know we've all done this one: Fax a materials list to 3 supply houses, asking for a price. But only one is going to sell you the stuff.

You may think it's wrong, or it may rub you the wrong way, but it's called Free Enterprise.

And none of the above, have to bring a fully equipped truck, and a qualified electrician with all his high burden costs to your door! Can't compare apples to peach pie.


In my area i needed a roofer, and most all wanted a fee to price a roof repair, of the two guys that did not want a fee, one looked from the other side of the street and gave a wild guess high ball price, the other free be came in a 20 year old rusted beater truck with ladders that had missing rungs, ya i bet his comp insurance is paid up.