David Lupberger: Stop Doing Free Estimates

Dave Lupberger shares why you should stop doing free estimates for customers

December 15, 2014

The best advice I ever received about selling came during a contractor sales training session. After a contractor had complained that he felt compelled to give free estimates because that’s what his competition did, the sales trainer suggested a role play. When the contractor, in the role of the homeowner, asked for a free estimate, the trainer, playing the role of the contractor, said “OK, how about $45,000.” The contractor, with a blank expression on his face, asked, “What’s that for?” The trainer replied, “I don’t know—you said you wanted a free estimate, so I gave you one.” 
That exchange still makes me smile when I think about it. As the trainer explained, a lot of guesswork and assumptions go into a free estimate. If a homeowner wants a real estimate, it requires research, review, and calculation. Can you imagine going to your doctor or dentist and asking for a free exam before agreeing to any procedures? Yet most homeowners ask exactly that of contractors when it comes to a remodeling project. If you comply, it probably means doing a lot of free consulting, from a quick home inspection to putting together initial numbers to providing preliminary design work. Time is a valuable asset, and you won’t be successful if you make a habit of giving it away.
It’s About Value
If you are going to stop giving away free estimates, the first step is to convince yourself that what you are doing has value. Like others in the industry—architects, interior designers, engineers—you deserve to be paid for preconstruction services. On a typical project, these services may include:
1. Meeting with the clients
2. Conducting a comprehensive needs analysis
3. Taking as-built measurements
4. Preparing conceptual drawings
5. Meeting with the clients again
6. Preparing a detailed design
7. Meeting with trade contractors
8. Revising the plans
9. Producing conceptual drawings
10. Meeting with the clients again.
And there are hard costs as well—mileage, copies, telephone expenses—that add up.
You’re Saving Them Money
Sure, you can poke holes in my argument, but any way you look at it, a free estimate amounts to offering to do 10-20 hours of work designing and estimating projects for clients with no contract and no guarantee of ever seeing a penny for your effort. (There are exceptions: It’s just common sense that a design agreement isn’t appropriate for a small project, like replacing a window.)
Think of it this way: Your expertise will save the client money. You can use your relationships with trade contractors to find the most efficient and effective ways to do what the clients want. And the practical experience you can add during the design process will not only save the homeowner money, but could actually improve the overall design.
The First Call is Free
The first visit is free—this is your due-diligence. You should ask questions about timing, budget, research the homeowners have done, and any past experience they may have had with remodeling. I learned long ago that if the conversation isn’t smooth on that initial sales call, it isn’t going to get any easier after the project begins. 
At the end of the first appointment, let the homeowners know that the next step in the process is to sign a design agreement, which lays out a payment schedule for delivery of preliminary plans and cost estimates. Point out the benefits of working with a design agreement, and the value you bring to the process by working this way.
That last part is important, because to sell the value of a design agreement, you yourself must be convinced that you are providing a valuable service to your client during the estimating and design phases. Honestly, what other professional could spend this much time on product development and give it away? At some point in working with a new customer, you need to start charging for your time.
A signed design agreement creates powerful results. When the homeowner writes a check (however small), they are off the market. They won’t sign a design agreement with more than one contractor. They are now your customer. With a design agreement, free consulting stops after the first sales call. PR
Download a Sample Design Agreement (PDF)

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