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3 Tips for Charging for Estimates


3 Tips for Charging for Estimates

Free estimates hurt your company in multiple ways 

By By Nick Scheel | Untamed Construction March 5, 2020
This article first appeared in the March 2020 issue of Pro Remodeler.

There have been countless articles, classes, and roundtable discussions on why remodelers should stop offering free estimates. Yet when I speak with colleagues from all over the country, there is a great deal of pushback against the change. I am regularly met with statements like, “In my market, the competition all offer free estimates. I would lose too many clients if I tried to charge.” 

Rather than argue for the merits of actually charging for your time, I want to instead focus on how one might convince clients that they should willingly pay for a proper accounting of the cost to construct their project. Here are three tips. 

1] Convince Yourself of the Value

Let’s start by defining what I mean by “estimate.” I have no problem ball-parking for a homeowner what a typical project like theirs might cost. If you’ve been at this job long enough, you should be able to do that without even stepping foot in the client’s home. We talk about budgeting during the pre-qualifying process and walk away if a client isn’t receptive to a realistic budget for their project. 

The free estimates that I’m discussing here are those that include any level of material, labor, and allowances for specific components that are formalized in writing.

The first thing is convincing yourself that there is value in your time, just as your client’s time is valuable. It’s taken you years to learn remodeling. You are an expert. You are experienced. You will use those highly specialized skills in creating a job costing. Why should that come for free? 

2] Explain Your Value to the Client

A reasonable person has a hard time arguing that their time is valuable but yours is somehow less so. Furthermore, if they don’t value your time, you probably don’t want them as a client. As we all are acutely aware, in any significant remodel there are numerous variables in both scope and selections. Until all of those are defined, it’s not possible to know what a specific project will cost. After outlining that simple fact, I then flip any “free-estimate” argument on its head and explain that it is simply disingenuous for someone to suggest otherwise. The free-estimate model is a derivation of the competitive-bid model that comes from commercial construction. The competitive-bid model starts with a defined set of plans and specifications—a service that the client pays an architect to develop. Then, multiple bidders offer up their “best” price to construct that set of plans. 

I take the time to explain these truths to homeowners, and most of them are extremely receptive. The ones who aren’t are not our ideal client.

When was the last time a client came to you with a set of construction-ready plans and specifications that you could “simply” put numbers to? Residential remodeling doesn’t work that way. The client expects you, as the remodeler, to present your best plan and a construction estimate. There is no way for your plan and estimate to be apples-to-apples with any other bidder, so why are you even trying? Not to mention the exorbitant amount of time it would require you to dedicate to developing specific-enough plans and a takeoff without a guarantee of getting the job. 

The reality is no one actually does that; in the free-estimate game, it’s a balancing act: Specific enough to guess at each element of the scope of work, and general enough not to waste too much time if you don’t get the job. You know all of these things to be true. 

3] Avoid the Term “Estimate”

Let’s change the narrative. We avoid the term “estimate,” since after all, that’s just your best guess at what a project could cost. Without diving too far into why you should also switch to a design-build model (that’s a story for another day,) we engage our clients with a design-and-project-development retainer. We package those project development services (read: takeoff and job costing) along with the design and drafting services, and we add value while also explaining how our project development is significantly more than “just an estimate.”

I take the time to explain these truths to homeowners, and most of them are extremely receptive. The ones who aren’t are not our ideal client. This brings me to my last point: Know when to walk-away. The right client can appreciate the effort involved and will value your time accordingly. Be different than your competition, know your value, and be uncompromising. 

NAHB Remodelers represents the nearly 50,000 members of NAHB who are involved in the remodeling industry.

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