I wanted to start another thread, by itself here that would continue onlong the lines of the service call thread.
I have read some good "pro's" towards charging trip fees/charging for estimates, but am still not convinced that is the way to go.
I need something that will prove to me, this is the way to go.
I asked 8 people today, mostly "blue collar" people if they would pay someone for an estimate and they all said no way.
So this is what I pose. I am going to ask people, my own kinda marketting tool, about wether they would, or would not use a contractor based on these fees. However, this is where I am stuck. Any question can be asked, and the answer can be manipulated by knowing how to ask the question. So rather than me asking the question my way, which would I guess be biased in some way, I ask you guys for help.
How would you word it? Or how can I non-biasedly(if that is a word), ask this question to both "blue and white" collar folks.
Here was my way:
Would you call a contractor, to give you an estimate for work you needed done, if you knew in advance, that the contractor was going to charge you for the estimate?
Like I said, so far 8 for 8, were no's.
Well DNK, I'll throw in my thoughts. If we were doing residential work I'm sure we would have to offer 'free quotes' or we wouldn't get any work. It's expected in that market and most, if not every EC offers it. In the retial/commercial market we have found over the past 10 years that they "shop around" just like a homeowner. We have established a good customer base that we rely on. Customers that use us because we are a proven entity. They seldom ask for quotes and when they do we can offer a 'ballpark' without ever having to make a site visit because we know the location. They accept the ballpark and 99% of the time just give us a green light. Then we have the shoppers, and we know who they are. We also know they are "shopping" and our response to "we would like you to quote a job for us" is always, thank you but NO thank you. We get those jobs 50% of the time w/o a quote.
Yup, I'm in the same boat.
Most of my customers are repeaters, that never ask for a estimate. They know me, trust me, and know it will get done. They do ask me to "ballpark" as you say, but that is just to get a PO cut. Never been held to one yet.
The newer ones who get referred, do the same, ask for the ballpark number. I do that for free if they are reffered by someone.I get most if not all of those.
I ask the above question, due to the probability of growth, acctracting new customers.
DNK - While our SOP is no free quotes, that doesn't mean if we see a certain opportunity we can't offer a free quote. We are a very flexible and progressive company. While we do not advertise or generally offer free quotes, doesn't mean we never do it. We do occasionally.
In the service & repair type EC business trip charges are not a problem. Our closing rate is 90% on the phone and 85% in the field.
Remember.....when they asked people "Would you pay for bottled water" I'm sure the first 8 people they surveyed said Never!
I agree Zaney, and after 15 yrs if the trend is charging for estimates, I may lean that way.
However, using one of your posts, you stated when you did "free estimates" your conversion rate was 60% of them, when you went to charging you got 86% of those.
So by this count, you now have 4 new customers if you provided free estimates.
If you charge, you have none.
If I was reading your post correctly.
But this is just in the prelimanary stages, I'll let you know how I make out.
(Editted for being a bonehead again)
[This message has been edited by Dnkldorf (edited 08-03-2005).]
How much does it cost to run a free estimate call and not get the work? How much does that lost time cost your business? Are the customers getting your free estimate also getting two or three other free estimates? Does this drive the overall profitability of their requests down? Who ends up paying for the lost time? Does the lower closing rate percentage coupled with the usual lower returns on those free estimate calls help or hurt your business? What about our trade in general? Does it really matter what the other ECs in your area do?
The real underlying questions are- where do you want to take your business and how will you get there? Charging for an estimate or not, are simply byproducts of your fundamental planning and vision you hold for your business.
I've thought about free estimates for months now. It is a substatial expense in time. What I've thought about the most lately are good clients who I got over the years by giving a free estimate.
There are many factors involved. Half of the display ads in the phone book here mention free estimates. While we don't want to reduce our business to the lowest denominator, we are in competition.
There are a few ways to handle free estimates.
1). Give the time away.
2). Consider it an overhead expense and include it in your rate.
3). Charge it in advance to those that want it as a prequalifying measure to weed out clients that want low price more than quality service.
From a personal perspective I want low price AND quality service. I usually have to call 10 contractors to get 2 or 3 to call back. Of those 2 or 3 I may find that none of them are insured (a real recent experience).
My conclusion so far is to do free estimates when I have time. If I'm sitting around praying for the phone to ring I'll do free estimates for anyone. If I'm installing 40-50 hours per week and doing 10-20 hours of office work when I can, I'll try to weed out the people that are only interested in low price.
What I commonly do for new customers is give them a written, non-itemized proposal with no time and material break outs. That I bring with me in a seperate sheet set. Then if they ask for a break out, I explain to them that if I give them a break out, it will cost them for the time it took to put it together. When they ask why, I explain that by giving you a itemized break out, I have in essence given you a tool by which you can either do the job yourself, or hand the list to some one else and say, do this cheaper and it is your job. And if the customer accepts this, pays and then hires me, I deduct this cost from the overall contract price.
So far, I have lost two jobs that way and later found out that the customer was a cheap bstrd and wouldn't pay in the end anyways.
2). Consider it an overhead expense and include it in your rate.
That's the best idea I've heard yet. It makes total sense to me, but I do not own my own business yet. I think when I do though, I'll ber doing free estimates.
Great discussion here folks.
My check list for chargeable estimates;
If I put on the tool pouch, charge
If I have to go back to office and make calls and pricing, charge.
If the stop is quick only within 1 hour than its free.
Ballpark on the phone has eliminated alot of wasted time.
I used to run around every sat. with no reward, people love to here "free estimate"
but if they ask me several times if this is free....then I don't take job.
Here's a situation that will add some fuel.
I teamed up with a local HVAC contractor, he promotes me, I promote him. Anyway, one of his guys gives their customer my card, because he needed a line ran to his new unit.
I get talking to the guy, after I was done. This guy is well off, has something to do with steel futures.
I ask him the question while I was there. About the free estimates thing.
It comes out, the contractor I teamed up with gives free estimates, and so did his competition.
My guy was $400 more than the next guy, but because he seemed more knowlegable, and spoke more directly to him, he got the job. The other guys gave the customer a bad vibe.
The customer wanted to meet all of them first.
Seems the $400 was well worth the hour or 2 it took to do the estimate.
Just thought you guys would find this interesting.
A very good point, dnk. If you call around town to come up with your rate instead of figuring it out for yourself you might want to consider that the guy you're calling may have less experience, less knowledge of the NEC, etc.
The one I've seen several times are large conduits with a dozen circuits. The electrician didn't understand derating. I've also seen local electricians replace an interior panel without doing the outside work, so the old 1940s cloth covered service wire was re-used (obviously without a permit).
Free estimates are a waste of time.... You could literaly do them all day and not make a dime from it. Some often do this, as I have in the past. Most of it can be done right over the phone on first contact, if scripted right.
"I think I need a service up-grade, I would like to get an estimate..."
"Well, are rates are $$$.$$ an hour, with %% mark-up on material."
(Either they hang up then, or stay for the ride...)
On average a service change can consume (So-many) hours, and approximately (So much) in materials, final results in cost can vary.
(Either they hang up then, or stay for the ride...)
If you like I can set up an appointment for someone to meet with you on-site for an estimate, from/to (two hour window), on some day...
(Either they hang up then, or stay for the ride...)
You have now given them 3 chances to back out, and 2 general points of information as a ball-park cost. Odds are it's yours when you get there, or someone else has already started it by the time you get there. If they go into shock on the first 2 points, theres no reason to even get the address.
e57, good point. I got a call from a homeowner the other day that wanted a written free estimate ( with a really cheap price ) so that he could use it to sell his house. There may be someone dumb enough to do this for the guy but it's not going to be me. If I think that the work sounds good and there is a profit to be made I will go and estimate the work. If not, I just give a high estimate over the phone, many times the customer say's that they were not going to pay half of that ( all I need to know ). I have found that if they are expecting a high price and you can come down a couple of hundred it's better than when they expect something cheap and you have to go up five hundred. You are more likely to get a referral when you are honest up-front.
Sometimes (as previously mentioned) an EC could offer an estimate at $XXX and advise the customer that if we get the job the estimate amount will be deducted from the final invoice. That is in effect, a free estimate.
Our techs ran 7 calls today, each one having a dispatch/service fee attached to it, and they performed the repairs for all seven. That, of course, is a good day, but not unusual. The dispatch/service fee helps your business in many ways. Primarily, it allows you to qualify the incoming request for service. Just as important, it allows you to manage your business. Meaning, once your employees are booked, you can raise your service fee; thus reducing the percentage of callers who actually book a service call for that day. In that process, you help to insure that the customers your employees do come in contact with are more willing to do business and/or have a more urgent need. Tire kickers kicked to the curb.
We only give free estimates for a few prequalified cases.
1. A past customer or referral that is a guaranteed job, they just want a price first to see how much they can do.
2. Generator sales
3. Large projects that we qualify over the phone before hand or we turn the job down without looking.
Everyone else pays a fee or maybe gets a ballpark on the phone if we feel comfortable that the job is standard enough.
Very few people in our area turn down our charge for the quote, which is deducted if we do the work. We get 90% of these jobs when we charge for the estimate, it definitely prequalifies the customer as someone not interested in cheap only.
"Free Estimates"--Two of the worst words in the English language (or any other language for that matter.)
They are never free! If you do not charge one and are driving around free all day you will be out of business. If you are "hiding them in your work" you are being dishonest.
By the way...nice water analogy. But if you ask anyone...blue or white collar if they would be willing to pay for something (and they are given a no option...the answer will be "no".) You are better off asking companies if they are successful booking these types of calls and if they have more than satisfied clients. I would be there is a direct correlation between these answers and the fact that highly successful guys operate with this as their SOP!
As a client there are only two things that can happen when they call around and get free estimates. Both involve being ripped off. I educate clients to this fact and let them know that they are playing a dangerous game. I tell them the costs invovled and what they are settgin themselves up for. 90% of them change their minds and all of the at least have a fear of the free estimate when I get done. Then you build the value of what you are going to do for them that the next guy won't and why it is worth your time to go with a company that is honest and pufront with all fees and would never "hide" them. This is the only way to do business and is fair to all involved.
"Well, are rates are $$$.$$ an hour, with %% mark-up on material."
E57, interested in why you would quote your mark-up on material. That's really nobodies business.
Without seeing the job you can only quote your hourly rate, you have no way to tell how many hours it will take. You can't tell what materials are needed either so why not just say "rates are $$$.$$ an hour plus materials".
If they are stupid enough to think that they are going to get pricing for a job like this over the phone then you probably shouldn't consider doing work for them anyway.
Since when is it dishonest to "hide" overhead in your price??? What if I told the customer that the other guys are "hiding" their price of gas in their "service charge"?
'But we are up front and honest and will do this and that and the other guy won't'??? Well if you ask me, unless you know specifically who this other guy is, and specifically what he will and won't do and what he is charging, your approach sounds less honest to me. I'm hearing a spin that sounds a lot more shady than "free estimate".
The implied understanding of free estimate is that it will be free if they decide not to have the work done, it says nothing about figuring or not figuring it into the cost.
Don't get me wrong, I hate the free estimate to the tire kicker too, but to all you "no free estimate" guys, where do you draw the line between "free estimate" and "competative bid" which is usaully just as free, is it not?
I understand the expense to me of "free" estimates, but something I come back to is...
2 of my top 5 all-time best clients started with free estimates. Maybe they are 1 in 50 or 1 in 100, but I'm glad I have them.
By the way, my top, number one, all-star client came from wiring a Habitat For Humanity home for "free". Work with them paid for my daughter's college expenses.
Would seem to me after reading some responses from various folks, that the people who don't like the idea of free estimates/competitive bidding are the guys who might of spent alot of money joining organizations/paying business consultants who told them this practice is not a smart business move.
Maybe, maybe not.......
As to the replies to "it is a waste of time"
could it be you need help in selling customers?
Some of you I think are looking at this the wrong way.
Let's say your competition charges $39 for and estimate/trip charge/service fee/BS charge. And let's assume you don't charge anything.
If people are more willing to call someone that has no charges up front, that should be an open invite to you as a potential sale waiting to happen. The next goal is to make that sale happen. Maybe this is where the guys who charge a fee faulter, they can't sell, so they get something out of the call anyway.
Maybe, Maybe not...
This may/may not apply to all, but I am confident this applies to some, they just won't admit to it....
Landon, if you are telling customers of how they are being ripped off by the free estimate guys, are YOU being honest?
I haven't ripped anyone off, and I do free estimates. And I think I am very sucessful in what I do.
(by the way, Welcome to the ECN Forum)
[This message has been edited by Dnkldorf (edited 08-30-2005).]
I'll be the first to confess that my sales skills are far behind my technical skills. I'm also tired of the time and effort needed giving free estimates to people who often have no intention of hiring ANY EC to do the work. My feelings on this vary daily, but I'm ready to thin out the non-referred shoppers.
I don't belong to any orginization nor do I spend thousands on consultants. I charge a dispatch fee because thats how I choose to operate our business. We stictly do only service work. Congats to you for having a succesful business as well.
We use Charlie Greer to train our techs for selling. The DVD series is well worth the investment.
We offer free quotes to existing customers that have a track record with us. That is, for a regular customer where we get 90%+ of the quotes. We simply add that cost to the job. We don't do this as a hobby, we actually try to make a living from what we do. Offering anything for "free" violates that general concept. I tried to think of the last "free" service or product I was offered.... then I remembered, no such thing as free.
Often a business will offer something free as a "Lost Leader" to get more traffic. Free coffee, or a full rebate sale item. The key, I think is knowing how to limit the freebie. Obviously you can't provide free coffee to 25,000 people if they aren't buying.
I recently had two calls:
The first was a lady who wanted a free estimate, and asked two or three questions to make sure it was free. The estimate was a complete waste of time.
The next was a lady who got my name from BBB online and said she was "going to do it right this time". I told her some charges to prequalify & it was no problem. No free estimate, no wasted time.
Usually people say things that let you know up front what kind of client they'll be.
Free estimates are a symptom of weak market position.
The big three auto companies are unable, right now, to stop their free estimates -- 'employee discount pricing.' For them as for us it is blood on the floor.
A stronger market is the only cure. The big three are too big for their market ‘niches.’
We, however, <i>can<i/> move into stronger markets.
One must ‘spoil’ best customers with service – for a price – and deliberately seek out prospects that resemble these best customers. All prospects are clearly not equal.
Best Customer can mean many things. For McDonalds their best customer is a repeat buyer satisfied with the limited menu that they are geared to produce. High volume to a set formula is their game.
For most residential service contractors the game is:
Same old needs = same old solutions > Flat Rate Pricing > Rapid fire bids > Averaging out the results > Saving on bid overhead.
For the ultimate in bid overhead savings:
Just pull dimensions over the phone – move your finger down your flat rate book and quote’em. Leave an opener for contract adders….
Have the customer send a picture via his cell phone to your computer screen. All of your best customers have or will soon have such cell phones.
Why visit at all?
"Free estimates are a symptom of weak market position."
Well said, when your in a weak position, you will try everything, from door hangers, to free estimates, spending valuable time grinding down, whatever assets you may have left, putting you in an even weaker position.
I think the wrongest thing to do if the market is slow to make it worse by driving to any possible location whereever,whenever for nothing.
Especially in times like these it is essential to prequalify your customers already on the phone.
If they are not willing to pay the dispatch fee they sure will not pay your rates for your services.
The time spend on driving to jobs and writing free estimates will not allow you to focuss on the customers that are willing to pay.you could have cashed in on that job ..but....sorry was busy giving free estimates.......
For what it is worth. I will estimate any job over the phone. I charge a $75.00 fee for a jobsite visit and a firm quote. Nothing is written unless it is paid for. If you asked an employee to stay 30 minutes after work for free to clean the truck they would tell you to go pound sand. Nobody does anything for free. A 5 minute conversation over the phone is just our responsibility as business owners. If the customer is serious about having the work done, they will want to compare your written quote to others they get. Yours states "quote" the others will probably say "estimate". If you explain the difference between the two you will most likely be awarded the job. The best part of meeting at the jobsite is that you can get a very good feel for the potential customer during your interview. Are they neat? What type of cars do they drive? Is their residence kept up, or is everything in disrepair? You name it you can learn alot about a customer while you are interviewing them. Always put your best foot forward and always be in control of the meeting.
Just curious jr4wire ~~ What is the difference between your estimate and your quote?
Sorry, I hit enter before I was finished. An estimate to us means; "Estimate $500.00" The job will not exceed this amount but may be less. "Quote $500.00" You can make the check out right now becasue that is what the invoice will be. Am I correct?
estimate: To calculate approximately (the amount, extent, magnitude, position, or value of something)
quote: To state (a price) for securities, goods, or services.
So, an estimate would be a "ballpark figure" (could be higher or lower) while a quote would be a firm price.
Sixer ~ That is, and always has been our definition also. Though we offer neither for 'free.'
Of course nothing is for free.....it's either added in the estimate when given, or it's added to the "cost of doing business", which is covered by the ever-increasing labour rates.
I've decided I'm giving everyone who calls in a free estimate. That's right. For everyone who calls in, I'll cheerfully let them know for free, that for $49 we'll send a professional electrician out to their residence!
you sound like maio, "the estimate is free, there's just a small trip charge for us to get out there"
with the prices of just gas, labor and advertising these days, you really have to do it.
if it costs you $50 to give an estimate (between advertising, labor and overhead) and you do not charge for it, look at these number.
you close 1/2 of your calls with a job average of $400. Well take $100 right off the top ($50 for the job you didn't get + $50 for the job you did get) and suddenly, you only have $300 to cover that job.
it's vicious. good luck with it wilkie
Wrong battle here. We're kindred spirits.
Your looking at the words too closely. We, like you, charge a dispatch fee to every inbound request for service or estimate. Our technicians run the call in brand new, fully stocked, logo'd vans in crisp uniforms and polished boots. They have all been professionally trained in in-home service, and since several of them just got back from a week with TechDaddy, you might be surprised how trained they are.Every price they give comes out of our standardized electrical pricing manual. Thats right, flat rate, baby! Live operator 24hrs a day/ 100% customer satisfaction guarantee, and on, and on, and on.