It’s Time to Stop Estimating for Free
The pressure to give free estimates is something that remodelers and custom home builders like you feel on a daily basis. Homeowners believe that providing free construction estimating is just the "cost of doing business" in the residential construction industry and that you should do it because your competitors do.
And general contractors, particularly small business owners, often think they need to perpetuate that belief to "get the job."
Changing that narrative in your mind and convincing potential clients they need to pay for construction estimates takes some work. It means shifting from "trying to win the job" to "selling your value to a client" and showing them that when you charge them for a project estimate, they are paying for the years of experience you bring, not just the total cost of the job in front of you. That experience is what enables you to provide them with a clear cost estimate and a better overall outcome.
The Problem with Free Estimates
More often than not, homeowners go into a remodeling or custom building project with little-to-no understanding of the actual direct costs and time involved. They've been conditioned to accept remodeling work in terms of what they see on HGTV, with unrealistic expectations of the process.
They don't see the behind-the-scenes time and work that goes into a large project. And they certainly don't see the upfront work involved in preparing an estimate.
Work like:
Building out the correct and complete scope of work (SOW)
Sourcing material pricing
Determining the total labor hours required for your internal team
Meeting with and reviewing the SOW with specialty contractors
Creating the proposal and scheduling time to meet with your prospect
So they expect you to give that work away for free. Because they think that's what every remodeler does.
Free Estimates Are Not A "Cost of Doing Business"
Think about the last time you had a toothache and went to the dentist.
Before they fix your tooth, they need to examine it, take x-rays and determine a course of treatment, which they provide you in an estimate.
But that estimate isn't free. You've paid for it through examination fees and x-ray charges because that's work the dentist had to perform in order to give you that estimate.
That's time the dentist could spend on other billable services, like fillings or root canals.
Similarly, the time you spend to prepare an accurate estimate with a detailed accounting of what a remodeling or new home-building job will cost is time you could be spending on other revenue-generating projects.
What Happens When You Give Free Estimates
The average person has approximately 2000 working hours in a year. That means your earning potential is capped, especially if you are self-performing most of your work.
So if you estimate for free, you are actively reducing your ability to earn with each hour spent.
As residential construction professionals, we know that an estimate isn't just a list of items with a total cost at the bottom. It's a lot of work that includes hours of planning, researching, and having conversations with clients, trades, and designers.
That time spent working on a construction estimate for bigger projects could represent anywhere from a couple of hours to a couple of days of work. Things like doing a quantity takeoff, building material lists, and figuring out your labor costs are time you're directing away from other paying projects.
Aside from losing the ability to earn revenue, when you give free estimates in your construction business, you are also:
Devaluing yourself
Clients already see general contractors as commodities. Not charging for work you complete tells the client that your time and work aren't valuable and sets the wrong expectation for the remainder of the project.
The client who starts a project by not paying for an estimate becomes the client who says, "While you're here, can you just do this too?" throughout the build because you've already given your time and work for free, so why wouldn't you do it again?
Allowing yourself to be judged solely on price
When you charge a client for an estimate, you show them the expertise and value you bring to their remodeling or custom home-building project and give them an understanding of the benefits of working with a remodeling contractor who has done the proper due diligence and legwork to capture as many details about project costs as possible.
If you give a client the estimate for free, you dilute the value you bring to the project because the client is only focusing on the bottom-line number you gave them.
Giving clients permission to "Ghost" you and shop your estimate around
"Ghosting" is the practice of ending a relationship with someone suddenly, without explanation, and withdrawing from all communication.
In the residential construction industry, this typically happens after a client gets a free estimate and doesn't like the number they see or it doesn't fit within their desired budget. So they stop returning your calls, emails, or text messages.
Meanwhile, they are taking the estimate you gave them and shopping it around for a better price, letting other contractors benefit from your unpaid work.
Since the prospective client didn't pay for that estimate, they don't connect any value to it and treat it like a commodity to be used.
Engaging in Apples-to-Oranges comparisons
This is something that puts both you and your prospective clients at risk. When clients shop around that free estimate you gave them, they open themselves up to tremendous risk by potentially choosing another contractor who will look at your total price and undercut it to get the job. Doing this means that the contractor is sacrificing scope elements and quality to come in lower, and is providing inaccurate estimates.
If those potential new clients then come back to you asking you to match that lower price, you risk taking a job without a proper profit margin or also having to cut corners on material costs or overhead costs, resulting in an inferior outcome for your clients.
Wasting your time on unqualified clients
Prospective clients who are only interested in free estimates may not be committed to actually following through with the project or may just be shopping around for the lowest price, meaning you're spending time and resources that don't result in actual jobs.
These are not the clients that will help you to grow a successful business long-term, so the paid estimating process is a great way to weed these out at the top of your lead funnel.
How to Stop Estimating for Free
Giving free estimates has been standard practice for so long that it can be hard to make the switch to a "paid estimate" mindset, especially because it feels like you need to do it so that you can remain competitive in your market.
But if clients are conditioned to pay for your services at the onset, starting with that estimate, they are more likely to commit to the project and aren't as likely to expect you to work for free at any other point along the way.
Recognize Estimating as a Job Cost
The process of meeting a potential client, determining their needs, consulting with specialty contractors, facilitating the drawings, and building out the scope of work (SOW) are all steps in the process of creating an estimate.
And all of this work is a job cost.
Architects, designers, and engineers all get paid for their time and efforts in design work for a new home build or a renovation, and so should you.
Build it into Your Sales Process
Getting potential clients to make the mind shift to paying for estimates means learning how to sell the value you bring to a renovation or custom building project based on your knowledge and years of experience, as well as the pre-construction process you will guide them through.
That value-add can look like:
1. Drawing on your experience to make value engineering suggestions that will align with the client's financial investment and design goals.
2. Offering suggestions for relatively easy add-ons that clients don't think about but would enjoy, like heated towel warmers in the bathroom or a mounted soap dispenser by the kitchen sink.
3. Highlight the gaps not evident in the architectural or design plans that will add construction costs to the project based on your years of experience.
A strong upfront sales process is your best tool for getting clients to understand how you operate and why they should want to work with you. It should convince clients why it's a good idea to pay for a residential construction company that draws on years of experience to properly investigate and detail their construction project's cost instead of just throwing a bunch of numbers on a page, or providing a square foot range, means a better outcome overall.
Focus On The Relationship
At the start of a client's journey to either renovate or build their new home, there's an initial conversation where the client and builder meet to discuss the project. This is a great opportunity for you to size up your client and the project to determine if it's a job you want.
Aside from asking all the relevant questions about timing, goals, desires, and past experiences, it allows you to see how well the conversation flows between both parties.
Focus on adding value to their journey by providing information. Not the super technical kind, but the solid advice you've built your reputation on.
“Help them understand the value in a paid estimating process that works methodically to arrive at the end price of their project before the beginning.”
Avoid Badmouthing The "Competition"
Showcase your value by explaining how all the time and work that goes into an estimate helps ensure it reflects the full scope of the project. Don't compare what you do to what a competitor does - or doesn't do. Just stick to the facts and treat the competition like they are irrelevant.
Remind potential clients that free estimates are not an apples-to-apples comparison because, at this early phase of the project idea, there are a lot of unknowns, and each person will interpret them differently, even with quantity takeoff.
Ultimately, clients need to be shown that they are basing a decision on the starting price of the project, not the end price, and that, based on the level of upfront work, a lot can change between the starting and ending price. And until all of that upfront due diligence is done, it's nearly impossible to arrive at a solid end price.
Just Start Charging for Estimates
It's never easy to start a new process, and it will feel awkward at first, but you just need to start doing it. It's not even about charging the "right amount" at the beginning. It's about adopting the process and becoming comfortable with it.
The more you do it, the more natural it will seem, and the more fluid your ability to confidently sell your paid estimating process will become.
If you have questions about whether you should charge a fixed price, or an hourly rate, or how to get started - click the button below 👇🏻
Don't Offer to Credit Back the Estimate
I've encountered many builders who opt to credit the cost of a paid estimate back if the client chooses to work with them because the struggle to get a client to pay for an estimate is real.
Back in 2010, when I started charging for construction estimates, I did this too - until I gained the confidence to say no.
Because crediting back the estimate cost just to close the deal only dilutes the value of your pre-construction work, validates the expectation that estimates should be free, and conditions clients to expect more free work during construction.
The Bottom Line on Free Estimates
Mass Media and "Uncle Bob" have altered clients' perceptions of how long a remodel should take – and what it should cost, meaning clients enter into the remodeling journey with unrealistic expectations of the process.
As professional remodeling contractors with years of experience under our belts, we need to give clients a new belief system for renovation or new home construction costs.
The best residential construction companies differentiate themselves from the rest of the pack by focusing on building a relationship with their client – not just the bottom line.
They know they need to teach clients that:
The cheapest quote is not the best quote
Cost is driven by the SCOPE OF WORK
Building a relationship with your contractor ensures your best interests are always the top priority
They need a builder that has processes in place to ensure their project estimate is as close to the end cost as possible
They do this with a rock-solid upfront sales process that includes paid estimates.
When you charge clients for all your work - including estimates- you assign value to the expertise and knowledge you bring to each project. You're also ensuring that you aren't being judged solely on price or giving clients a reason to shop your estimate around.
Paid estimates also avoid the chance that you are being put in an apples-to-oranges comparison or wasting billable time on clients only interested in "getting the best price."
You deserve to be profitable and not be treated like a commodity. If you're having trouble connecting your value to what you charge, click below to learn more about the BUILD AND PROFIT SYSTEM, which provides you with a PROVEN framework to get paid for every single estimate you create.
