Reasons For Not Giving Free Estimates

[iwire]

Never in my life have I seen more people in a skilled/professional occupation more resistant to maximizing profit than electricians.

Take a look at the airlines.

 

[peter d]

Take a look at the airlines.

Well, I meant people who acquire a skill set (apprenticeable occupations or degree requirement) and then go into business (rather than an entire industry like airlines).......things like accountant, lawyer, doctor, dentist, mechanical trades....etc

 

[iwire]

Well, I meant people who acquire a skill set (apprenticeable occupations or degree requirement) and then go into business (rather than an entire industry like airlines).......things like accountant, lawyer, doctor, dentist, mechanical trades....etc

The concept is the same, they sell tickets at less then cost.

Sounds familiar to me and they are run by people who went to school to be 'business people' as opposed to many electricians that happen to run a business.

My only point is I really don't think ECs are alone in the trap of trying to undercut the completion. I think if we really thought about it there are many examples of this.

 

[peter d]

I think if we really thought about it there are many examples of this.

Yes, of course there are. It just happens to affect us more directly as electricians because we work in this industry, and that is what I find troubling.

 

[iwire]

Yes, of course there are. It just happens to affect us more directly as electricians because we work in this industry, and that is what I find troubling.

I just find it kind of troubling that you keep putting ECs down like they are the only poor business people.

Maybe I just misunderstand you. :smile:

 

[peter d]

I just find it kind of troubling that you keep putting ECs down like they are the only poor business people.

I thought my views on the subject where pretty clear, but I guess not. It's definitely a misunderstanding.

As for poor business people, I think they can be found in any business anywhere. But what would be the point in talking about other business not related to the electrical trade?

 

[LawnGuyLandSparky]

Maybe it would have only ended up costing $250.00 if all contractors charged for estimates and he didn't have to factor in his expenses for all the free estimates he gave and didn't get the job.

I doubt that 50% of a contractor's expenses are attributable to estimating.

 

[LawnGuyLandSparky]

Only about the top 1% of contractors ever bid the multi-million dollar jobs, it's a very exclusive club. They do try to keep the Rif Raf out by making the entrace fee to the game high.

I doubt if you will ever see anyone bidding those jobs that's not already paying very high fees to be members of other clubs ( the vey best Country Clubs ).

Has nothing at all to do with charging for estimates for small residential work. Some people may not like it but it's already an established business proceedure.

The numbers may be smaller for a small residential service company, but the process is the same. The "price" for being a member of the small-work club is free estimates.

I've said before, Sears, Home Depot, Lowe's all advertize free estimates until you read the fine print - it's free in that it's cost is credited to the work if you agree to the work... Even car repair shops, especially transmission shops around here all pull the same stunt. If you fail to sign the dotted line, the creditable fee for the estimate is non-refundable.

 

[aline]

I doubt that 50% of a contractor's expenses are attributable to estimating.

Maybe I'm missing something but this was my thought.

The big box stores charge $100 for an in home consultation (estimate).
If they get 1 job out of 3 estimates they credit the $100 estimate to the job they got which leaves them with $200 from the other two estimates they didn't get.

Another contractor gives 3 free estimates and gets 1 job out of the three.
This leaves him with zero from the other two estimates. He came up with a price of $450 for the job.

The big box store came up with a price of $550 for the job but credit back the $100 estimate fee for a price of $450 as well. The difference is the big box store already has $200 more than the guy that gave the free estimates. So why couldn't the big box store knock $200 of the $450 price if they wanted to? Had they given free estimates they wouldn't of even had this $200 to begin with. They could just knock $50 off the price and do it for $400.

Some people have more trust in hiring the big box stores than they do hiring an independent contactor. They feel safer going through the big box store to have the work done. They're not as worried about them skipping town with their money or that they won't be around if they have problems in the future.

 

[aline]

I've said before, Sears, Home Depot, Lowe's all advertize free estimates until you read the fine print - it's free in that it's cost is credited to the work if you agree to the work... Even car repair shops, especially transmission shops around here all pull the same stunt. If you fail to sign the dotted line, the creditable fee for the estimate is non-refundable.

I haven't seen where Home Depot or Lowe's advertise free estimates.
They do advertise that they give in home estimates but I don't see where they say it's free. If you read the fine print on the their websites they mention that if you don't go ahead with the work while they are there then a nominal trip charge applies.

 

[Sparky555]

I doubt that 50% of a contractor's expenses are attributable to estimating.

True enough. Half of the TIME (in residential service) isn't billed to any specific job, and the majority of that unbilled time is in free estimates, if you do free estimates. The most significant change that can be make to reduce the quantity of unbilled hours is to limit free estimates.

Dave

 

[emahler]

free estimates....it's a backwards system....we punish those that reward us and reward those who steal our time....

 

[LawnGuyLandSparky]

True enough. Half of the TIME (in residential service) isn't billed to any specific job, and the majority of that unbilled time is in free estimates, if you do free estimates. The most significant change that can be make to reduce the quantity of unbilled hours is to limit free estimates.

Dave

Limit free estimates and you're limiting or eliminating potential customers.

 

[LawnGuyLandSparky]

Maybe I'm missing something but this was my thought.

The big box stores charge $100 for an in home consultation (estimate).
If they get 1 job out of 3 estimates they credit the $100 estimate to the job they got which leaves them with $200 from the other two estimates they didn't get.

Another contractor gives 3 free estimates and gets 1 job out of the three.
This leaves him with zero from the other two estimates. He came up with a price of $450 for the job.

The big box store came up with a price of $550 for the job but credit back the $100 estimate fee for a price of $450 as well. The difference is the big box store already has $200 more than the guy that gave the free estimates. So why couldn't the big box store knock $200 of the $450 price if they wanted to? Had they given free estimates they wouldn't of even had this $200 to begin with. They could just knock $50 off the price and do it for $400.

Some people have more trust in hiring the big box stores than they do hiring an independent contactor. They feel safer going through the big box store to have the work done. They're not as worried about them skipping town with their money or that they won't be around if they have problems in the future.

Based on your last paragraph, the chain store is already at an advantage being a well known and possibly trusted venue. I'll bet they GET most of the jobs they estimate, as a customer already knows he's gonna have to leave the estimating fee on the table if he walks away, and figures "If I don't have them do it, I'm already losing money."

The entire process eliminates the tire kickers.

 

[emahler]

Limit free estimates and you're limiting or eliminating potential customers.

actually, if done properly, limiting your free estimates increases your number of viable customers....when we did resi service, we realized hat no everyone was our customer...we only targeted about 20 percent of he population in area we covered....that was our customers

 

[petersonra]

actually, if done properly, limiting your free estimates increases your number of viable customers....when we did resi service, we realized hat no everyone was our customer...we only targeted about 20 percent of he population in area we covered....that was our customers

This morning I paid $52 to have a plumber come out and tell my wife he has to order a part to fix my outside faucet and that he will be back to fix it when the part comes in.

 

[Thomp]

actually, if done properly, limiting your free estimates increases your number of viable customers....when we did resi service, we realized hat no everyone was our customer...we only targeted about 20 percent of he population in area we covered....that was our customers

Yeah, I have to agree with this. It eliminates those can't or won't pay.

 

[aline]

A homeowner thinks a project he's thinking about doing should cost about $500 so he calls up three contractors to get free estimates. Of course he also wants these free estimates after he gets off work or on a saturday.

When all three contractors give him a price of over a $1,000 he calls three more contractors to get three more free estimates.

When they all give him a price of over a $1,000 he either doesn't have the work done at all, he does it himself, he finds a handyman to do it or he has his brother do it.

The homeowner has nothing invested in his project so he has nothing to lose by not having it done. Charging for estimates helps weed out the customers that are just thinking about doing a project if it can be done at the price they're thinking it should cost.

I had an appointment scheduled this morning to give an estimate for adding two countertop receptacles in a kitchen. They were extending the countertop and adding cabinets. I scheduled this appointment a weeks ago and explained there would be a dispatch fee to come out and provide the estimate and it would be waived if they had me do the work that day while I was there.

I called last night to remind them of the appointment and got an answering machine so I left a message. I called this morning to let them know I was on my way and would be there in a half hour. The phone was busy so I hung up. About five minutes later I get a call from the homeowner and he asks me if I was going to charge him to come out. I explain the dispatch fee to him again.

He then tells me he has four other electricians already comming out and none of them are charging him anything and he plans on going with the lowest bid. He tells me if I want to come out for free and I'm the lowest bid he'll have me do the job.

I ask him if price is his only concern or is he also concerned about the quality of the work.

He tells me it's an easy job and any competent electrician should be able to do it so he's going with the lowest bid. It would have been nice of him to have called me sooner and let me know this, instead of when I'm heading out to the job.

These are the kind of customers that I'm trying to weed out.

Some of my best customers come from "Angies List". http://www.angieslist.com/AngiesList/
Customers pay a fee to find contractors on Angies List.
This is in contrast with other websites where the contractor pays for the leads. Angies List is free for contractors.

The customer already has something invested finding contractors to call. They don't need to pay to find the lowest priced contractor. Finding the lowest price isn't their main concern. Some people are willing to pay to find great service. These are the customers I want.

 

[petersonra]

I doubt many HO's call for multiple estimates. A project's budget is an important part of the project. if you get a price that is just insane compared to what money you have available to do the project, you either cancel the project, modify it in some way, or get another estimate to see if the first price was just nuts or something.

 

[aline]

I doubt many HO's call for multiple estimates. A project's budget is an important part of the project. if you get a price that is just insane compared to what money you have available to do the project, you either cancel the project, modify it in some way, or get another estimate to see if the first price was just nuts or something.

So if you get another estimate and it's half the price of the first estimate how do you know the second price isn't just nuts or something?