To Charge or Not To Charge… That is the question. Running around doing ‘free estimates’ is time consuming; and time is money. Not only are there the direct costs of gas, vehicle depreciation, and time, but then there is the opportunity cost of your time which could be spent on an activity that produces a better ROI.
I have published on this blog, in multiple posts, that you should charge for quotes, and qualify customers by phone, usually throwing out a ball park price and getting a verbal ‘ok’ before proceeding. I even wrote a post that the words ‘free estimates’ should not be in your advertisements.
Tom Reber, who runs a great podcast and who’s advice I respect, shares the same mindset of qualifying calls leads by a phone and getting that ‘ok’ before putting the tools down and heading out there. He has even done a role play call demonstrating a successful qualifying call, which is worth watching.
But in practice… I don’t necessarily follow this strategy. That’s led to some confusion and questions. Yes, we (my company) does occasionally charge for estimates and qualify customers, but we are mostly a ‘free estimate’ operation.
Here’s the deal, the more leads you see face to face, the more you will ultimately sell. The harder you qualify, the more leads you will qualify out. Most leads will find an estimate charge disrespectful or insulting and their business elsewhere.
While I don’t have any numbers on the matter, it is no secret that there is no shortage of contractors offering ‘free estimates’ and I believe there is huge base of respectable customers that refuse to pay for estimates or give a verbal commitment over the phone.
Ultimately if you want to grow, you will need to show face without a paid fee or a verbal approval.
Rigorously qualifying all leads, or charging for estimates…
Works when you’re overwhelmed with your current work burden. In other words you’re in hot demand relative to your production capability. This situation is usually temporary.
Either..
You’re a small operation, largely doing the work yourself. Your focus needs to be on building up solid employee’s that can do the work to your standards so that you can step out of the field and sell projects. In this case, you might want to schedule your estimates midday so you can be on the job site for the start, and there to inspect at the end.
Or…
Your sales pipeline, and work queue is so full that you cannot reasonably expect customers to wait that long for you to show up to do an estimate and get around for service. In other words, your business is on fire and you can capitalize on the ‘demand’ for your services.
Practically Speaking
Most of us contractors, and trades business owners won’t fall into either of those scenario’s, or if we do it is just temporary. We need to grow, we need to sell more, BUT we need to maximize return on time and not spend all day driving around. What’s the solution?
Loosening the reins and making the most of all sales opportunities that are efficient for our business. Here’s how:
Identify your target services.
Give free estimates for the services that you target. These should be the ones in which you have a competitive advantage, a higher margin, and a higher likelihood of selling. Show face to these estimate requests for the aforementioned .
Target service areas.
Make the best use of your time, by keeping your estimate pool location concise. You can meet more people in less time, and then you’ll also gain the advantage of being able to say “we also did the project right up the road”, further increasing your likelihood of a sale.
Soften the qualifying standards.
In statistical terms, don’t try to data mine your lead pool. Through the qualifying process it is too easy to ‘disqualify’ everyone. I’m guilty of this myself. Instead just focus on making sure the customer has a reasonable understanding of budget, and their services are within your scope (or target services) then go on out.
The Bottomline
Qualifying and charging for bids, will eliminate you from many profitable sales opportunities. There are certainly times, when qualifying leads, and charging for estimates needs to be firm, and it is good to learn the process of handling this (declining projects, or telling leads there is a fee), but when trying to grow, I find it more lucrative to loosen the reins on qualifying and show face. Of course there will always be some projects that require a charge for the estimate, such as major projects requiring design and itemization.