Charging for estimates is not working!

[SSSCORP]

Don't charge

Don't charge

Give all the estimates you can, but don't charge for them - estimates are free.
Or so the customer thinks. You need to account for your overhead in all your job bids, so id you loose some bids you have not really lost anything.

Would you pay for an estimate? No way.

PDX

 

[bradleyelectric]

another person not in that field heard from.

 

[emahler]

i can perform an accurate bid on a $250,000 electrical project in about 8 hours....in my office, looking at prints

I can perform an accurate bid on a $1.5 mil electrical project in about 40 hrs...in my office looking at prints

I can perform an accurate bid on a $500 service call in about an hour, including travel....because I have to go to the customers house...

Each hour spent giving an estimate, costs in real dollars, around $70...this does not include the lost revenue if I were billing that time out...


So..in situation one, I spend approx $560 to get a $250,000 project...which amounts to 0.25%

In situation two, I spend approx $2800 to get a $1.5 mil project....which amounts to 0.20%

In situation 3, I spend approx $70 (not including gas, wear and tear, or advertising expenses) to get a $500 project....which amounts to 14.0%

little bit of a difference, huh?

 

[Dnkldorf]

Look, here's the deal.
You have to put something out, before you get something in return.
You put out a little, you get a little.
You put out a bunch, and you might get a bunch.


You can defend your model of dispatch fees/service charge fees/ anything you want to call it fee, until the cows come home, I don't really care.
You want to break it out into numbers to be fancy.......I ain't stopping you.

The notion of how if "we all stick together" for the sake of the industry, and we can can force consumers to pay .....blah,,,blah...on their knees crap is apalling,

If you have a problem with your business model, it's your own fault, not everyone elses.




Competitive bid pricing isn't really a business model, is it?



IMO

 

[emahler]

Look, here's the deal.
You have to put something out, before you get something in return.
You put out a little, you get a little.
You put out a bunch, and you might get a bunch.


You can defend your model of dispatch fees/service charge fees/ anything you want to call it fee, until the cows come home, I don't really care.
You want to break it out into numbers to be fancy.......I ain't stopping you.

The notion of how if "we all stick together" for the sake of the industry, and we can can force consumers to pay .....blah,,,blah...on their knees crap is apalling,

If you have a problem with your business model, it's your own fault, not everyone elses.




Competitive bid pricing isn't really a business model, is it?



IMO

dnk, i'm glad your back...i missed your warped views...this is the happiest day of my life...

 

[Dnkldorf]

dnk, i'm glad your back...i missed your warped views...this is the happiest day of my life...

You gotta make hay when the sun shines, you know.

It's good to hear I can make both sides happy, it means alot.

 

[aline]

i can perform an accurate bid on a $250,000 electrical project in about 8 hours....in my office, looking at prints

I can perform an accurate bid on a $1.5 mil electrical project in about 40 hrs...in my office looking at prints

I can perform an accurate bid on a $500 service call in about an hour, including travel....because I have to go to the customers house...

Each hour spent giving an estimate, costs in real dollars, around $70...this does not include the lost revenue if I were billing that time out...


So..in situation one, I spend approx $560 to get a $250,000 project...which amounts to 0.25%

In situation two, I spend approx $2800 to get a $1.5 mil project....which amounts to 0.20%

In situation 3, I spend approx $70 (not including gas, wear and tear, or advertising expenses) to get a $500 project....which amounts to 14.0%

little bit of a difference, huh?

That's assuming you get every project.

In situation one and two it's more likely they'll go through with the project and won't be looking on Craig's List to find the guy that under prices every job or will do it for a six pack of beer.

In situation 3 It's more likely the customer will decide not to do the project at all, do it himself, get his neighbor to do it or drive by the homeless shelter and hire the guy with the sign that says will work for food. The dispatch fee weeds these people out. They're too cheap to pay a small dispatch fee. These are the people I don't need for customers.

In reality, in situation 3 you're probably spending a lot more than $70 for every $500 project you get.

The funny thing is the contractor that charges a dispatch fee to come out and give an estimate for these small jobs is reducing his overhead expenses therefore he can offer a lower price to the customer than if he wasn't charging the dispatch fee. Everyone here is saying that you just put the expense of giving free estimates into the price. That jacks the price up. All your customers pay for the guy that gets five free estimates then just decides to do it himself or have the homeless guy do it for beer money.

Real customers aren't saving anything by getting free estimates. They're actually paying more. They just don't realize it.

It's funny how some will say that they would never pay for an estimate.
Not only are they paying for the free estimate they got from the contractor they're paying for all the free estimates he gave to other people who didn't hire him.

New Flash: You pay for your free estimate and then some.

I personally don't have a problem paying a contractor a dispatch fee to come out and give me an estimate on my small project. I would do a little research and find three that I thought were the best choice and pay them to give me an estimate and my decision wouldn't be based on price alone.

 

[growler]

Look, here's the deal.
You have to put something out, before you get something in return.
You put out a little, you get a little.
You put out a bunch, and you might get a bunch.

I have used this logic but I have always found that it works better if you get them drunk first, slows down brain function. :grin::grin:

Sound reasoning would prove that no one buys the cow if milk is free.

Folks we are talking about electrical work here so don't get your mind in the gutter.

 

[aline]

Dnk,

Didn't you once say you got out of the residential small job, service & repair business because their wasn't enough money in it for you?

Maybe if you had been charging a dispatch fee it would have been diferent.

A lot of guys that pipe in about how you should operate a residential service & repair business don't do this type of work. They say they don't do it because it's more trouble than its worth but yet they're experts on the subject.

 

[aline]

Would you pay for an estimate? No way.

PDX

Yes I would and do.
If you hire a contractor you paid for an estimate and not just one either.
Don't kid yourself estimates are not free.

If it makes you feel better go and ahead and say you wouldn't pay for estimates.

When I go to the store I don't pay for shoplifters either.

 

[aline]

I know. I know.
Guys that want to discuss these kind of issues and want to try to improve the industry they work in are just complainers. They should just get over it and continue doing things as they have always been done. The way things have always been done has to be the best way right?

 

[Dnkldorf]

Don't kid yourself estimates are not free.

A free estimate is just that, something for free. Most people recognize free with being worthless.

However, something at "no cost" to them upfront is more entertaining to them. If you can sell in your market, theres an open door.

Take the $59-99 service charge you initially shock the customer with, and bury it in the price of the job, just like the rest of us.

If this prices you out of a market, you might have to look at ways of finding out why, rather than defend a practice headed out the door for the next couple years.

All markets are heading in different directions than they have been for the last 5 or 10 years.

You have to see it and change with it.

IMOWM

 

[aline]

Take the $59-99 service charge you initially shock the customer with, and bury it in the price of the job, just like the rest of us.

My dispatch fee is usually $29. I've never charge more than $39 for a dispatch fee.

If this is going to shock the customer wait until they see my price for the work.

I would rather have them be shocked before I waste my time driving out to their home to give them an estimate.

If they're shocked by $29 I don't think I want them for a customer.

 

[aline]

A free estimate is just that, something for free. Most people recognize free with being worthless.

Now I know why so many people don't want to pay contractors anything to have work done.

We run around giving free estimates so we must be worthless.
Why else would we do this?

If our estimates are worthless our work must not be worth much either.

 

[celtic]

However, something at "no cost" to them upfront is more entertaining to them. If you can sell in your market, theres an open door.

Entertainment also costs....unless, of course we are stealing cable and still sneaking into movie theaters.
I don't know anyone who plants themselves in front of a TV at Best Buy to watch Oprah....but I'm sure somewhere, there is someone doing just that.

 

[growler]

We run around giving free estimates so we must be worthless.
Why else would we do this?

Even a lot of electrician don't understand the idea behind the "free estimate". The idea of the free estimate was never ment to to provide a free service to customers it was an advertising gimmick designed to get a salesperson inside the house to sell a customer things they don't want or can't afford.

A customer calls because they are having trouble with the receptacles in the bedroom and they call a contractor offering free estimates. The contractor sends a sales person out to try and sell a service upgrade.

It's the same when HVAC contractors offer a $69 inspection of the heating an cooling system with free filter change. There is nothing cheap about it, it a sales call. The techs are looking for old systems in need of replacement. If they do 10 calls in a day and find one sytem where the customer is interested in a replacement they have made good money for the day. It's not about the $690 they take in for service it's about the new $6000 system they get to sell.

If you are just selling service then you do repairs for the agreed upon price and point out things that may need attention but your money is made by selling labor at the correct rate and anything else is gravey.

If you give free estimates is important to try to sell every customer a new service or at least some big ticket item to recover the cost of time spent.

It's really more honest to try to charge for the labor and let the customer decide when the can afford a service upgrade ( unless it's really needed) than to try to sell every customer a big ticket item to cover the cost of something the customer thinks they are getting for free.

Remember this, the companies that started this whole free estimate thing were not actually out there giving a free estimate for a receptacle change out ( there never was any money in that), they were out there on sales calls.

New electrical contractors would read in the yellow pages that some company was offering free estimate and were dumb enough to believe it just like the customers.

 

[bradleyelectric]

I don't pay for estimates. If I need something done I call someone to come do it and pay the bill. I don't find people out of the phone book to do it. I find someone that knows someone that does it for a living and call them if I don't already have someone. If I don't know who to call I pick up the phone and call a friend and ask who we use for ..... Than I call them and tell them what I need. I'm not looking for who will do it the cheapest. I'm looking for someone competent I can trust and will service their work if needed.

 

[Rewire]

Entertainment also costs....unless, of course we are stealing cable and still sneaking into movie theaters.
I don't know anyone who plants themselves in front of a TV at Best Buy to watch Oprah....but I'm sure somewhere, there is someone doing just that.

Back in the eightys Me and the wife would go to K-mart and while she shopped I would go back in electronics and play the "new" computer chess game.

 

[aline]

I don't pay for estimates. If I need something done I call someone to come do it and pay the bill. I don't find people out of the phone book to do it. I find someone that knows someone that does it for a living and call them if I don't already have someone. If I don't know who to call I pick up the phone and call a friend and ask who we use for ..... Than I call them and tell them what I need. I'm not looking for who will do it the cheapest. I'm looking for someone competent I can trust and will service their work if needed.

So you don't think when they come out and do your job they didn't factor the free estimates they gave other customers and didn't get the job into their overhead and include it in the price they gave you?

Just like you pay for shoplifters you pay for estimates.

You may not see a line item for free estimates given to others on your invoice but it's in there.

You really don't think you pay for estimates?

 

[aline]

Back in the eightys Me and the wife would go to K-mart and while she shopped I would go back in electronics and play the "new" computer chess game.

If you're watching tv while the wife shops that's the most expensive entertainment there is.