We give them away everyday!
It’s a daily occurrence all over this grand landscape of contracting. We run out and give away our time and experience for free hoping we will get a certain portion of the business. It’s one of the few professions where we give away our expertise.
So that’s just the cost of doing business right?
Imagine calling a doctor’s office and the asking the doctor to see you for free and give you an estimate on the cost to fix your broken leg. We pay to have a diagnostic check performed on our car when the check engine light appears on the dashboard.
Let’s look at the real costs of giving free estimates:
The average contractor gives 2 to 3 estimates a week and let’s assume this is for 40 weeks out of the year. If you live in a typical area of the country let’s say it takes 30 minutes to drive to and from the site each way. Let’s throw in about 2 gallons of gas for your truck, here in New York we are spending almost 4 bucks a gallon right now!
In general you probably spend about an hour meeting with the owner to discuss their project, take notes, and perhaps some pictures. Then many return to the office and type up a proposal and send it out via email. Let’s add another hour for your time in the office crunching numbers.
Now you have to put some value on your time right? Here’s a question to ask yourself: “If you were to pay someone with the same level of skill to estimate the job what would you have to pay that person?” Also include taxes, etc into the equation. Here in New York I would say 30 bucks per hour.
So here’s the math: 3 hours time + 8 bucks in gas = $98 x 2.5 estimates per week= $245 x 40 weeks = $9800 per year in free estimates. I invite you to try this exercise with your own numbers and see what the real costs are.
There is also the lost opportunity of not spending some or all of that time on high value, high impact activities. Those activities that leverage your time and talents. Marketing your business and leading your people are high value activities. So another way to look at the cost is: “What would I pay someone to manage my business for me?” $100,000 a year? That is roughly $50 per hour. Now our total costs for free estimates is up to $16,000 per year.
I recommend that my clients trade estimating for marketing time and begin to charge for estimates.
Not possible you say? On August 22nd I will show you a way to begin charging your customers to develop a scope of work for their project. I know several contractors in various areas of the country that are using these methods to get compensated for their time and expenses. They are doing it, why not you?
I have teamed up with Blogging Painters to bring you this webinar,
We are limiting the size of the webinar to 25 contractors so sign up now and reserve your spot today.
I hope to see you August 22nd at 5pm eastern time.
Feel free to comment below if you have any thoughts or questions