# Charging for estimates is a must



## CotoCon (Apr 3, 2011)

In have an established business in Los Angeles, California and have now started to charge for estimates. Due to the increase of gas prices, Its a must. I'd like to know what the average rate is for:
Insurance loss estimate: $
Estimate where you have to read plans and do take offs: $
Minor home repairs $
Is there a standard out there for estimate charging ?

All contractors should get together and make it mandatory to charge !

Note from moderator: Please no pricing questions. Please see this thread


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## Diamond D. (Nov 12, 2009)

I agree.

But, not here.

D.


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## john elliott (Oct 23, 2005)

CotoCon said:


> All contractors should get together and make it mandatory to charge !




Very small chance of that happening! About the same as world peace, faster-than-light travel, or Sarah Jessica Parker winning a beauty contest.


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## MikeGC (Dec 6, 2008)

CotoCon said:


> Due to the increase of gas prices, Its a must.


Some are true believers in this and others are not. I have chosen to increase my lead flow and qualify the customers more thoroughly and reject those that are unworthy of an investment in time and gas instead of charge customers up front that are right for my companys long range goals



CotoCon said:


> I'd like to know what the average rate is for:
> Insurance loss estimate: $
> Estimate where you have to read plans and do take offs: $
> Minor home repairs $
> ...


These types of questions get crucified here and get the thread closed and you get referred to the pricing and success thread. Plus there are already threads of charging for estimates with many responses thoroughly hashed out but my recollection is they dont have going rates 



CotoCon said:


> All contractors should get together and make it mandatory to charge !


Do you know what a scab is? If not ask a union member. Everyone getting together aint gonna happen but there is a movement gaining popularity for charging for estimates. I beleive Lowes installed services does it. Last I knew it was a hundred bucks credited towards the work


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## J L (Nov 16, 2009)

MikeGC said:


> These types of questions get crucified here and get the thread closed and you get referred to the pricing and success thread.


That would be this thread: http://www.contractortalk.com/f16/pricing-estimating-success-27899/



MikeGC said:


> Plus there are already threads of charging for estimates with many responses thoroughly hashed out but my recollection is they dont have going rates


Some charging for estimates threads: 
http://www.contractortalk.com/f16/i-no-longer-do-free-estimates-94028/
http://www.contractortalk.com/f16/another-charging-estimates-thread-90256/
http://www.contractortalk.com/f12/no-free-estimates-90586/
http://www.contractortalk.com/f12/i-am-joining-ranks-no-free-estimates-84391/
http://www.contractortalk.com/f16/free-estimates-82398/
http://www.contractortalk.com/f16/still-charging-estimates-82218/
http://www.contractortalk.com/f12/charging-proposals-works-78403/
http://www.contractortalk.com/f11/thats-no-more-free-estimates-76919/
http://www.contractortalk.com/f11/charging-estimates-74657/


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## Kent Whitten (Mar 24, 2006)

We will leave it open, just know that there are no pricing questions, no "how much" or "what's the going rate" questions. 

I do agree that charging for estimates has to come sooner or later. maybe not for everywhere, but as time progresses, people realize that it's time out of your life to do this and everyone knows that time=money.

I remember auto mechanics never charged before and then all of a sudden things changed.


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## pcplumber (Oct 12, 2008)

*It is illegal*

Everyone getting together to set a price is 'price-fixing' and is against the law. It would be great to get everyone to violate this law and the true-blue price for charging for an estimate would be no less than $150 per hour portal-to-portal. So, if you can't get the $150 per hour you may as well just do the estimates for free.


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## MikeGC (Dec 6, 2008)

pcplumber said:


> Everyone getting together to set a price is 'price-fixing' and is against the law. It would be great to get everyone to violate this law


Residential real estate commissions about 95% at 6% but its NEVER everyone


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## CENTERLINE MV (Jan 9, 2011)

WHY charge for estimates? That's the point of "overhead" You have to figure how much time you spend in a year (or whatever forecast period you want to use) and add it in to your overhead. If you're in the minority charging for estimates you won't get the job in my opinion. 

Personally, I don't charge for estimates but I tell the homeowner that if they decide to hire me, then I will take the time to hash out the numbers and give them a price (which of course includes my time of putting together the quote). 

It's the same concept as adding a "fuel surcharge" line at the bottom of your bill. It's just another item to reflect negatively on you. Just add it in to your overhead--simple.

To the O.P., as far as your comment, "All contractors should get together and make it mandatory to charge !"----ummmm... I'm not touching that one.:blink:


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## greg24k (May 19, 2007)

framerman said:


> We will leave it open, just know that there are no pricing questions, no "how much" or "what's the going rate" questions.
> 
> I do agree that charging for estimates has to come sooner or later. maybe not for everywhere, but as time progresses, people realize that it's time out of your life to do this and everyone knows that time=money.
> 
> I remember auto mechanics never charged before and then all of a sudden things changed.


Framerman, how much did you pay for that hat in the picture?:thumbsup:


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## flinstones (Feb 3, 2011)

If competition is high I don't think its a good idea to charge, however in a lot of instances people label companies that charge as pros, thinking that if you don't charge you are desperate for a project.


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## CSL (Mar 24, 2011)

An estimate is an estimate. I write up a simple estimate on a single peice of 8x11 regardless of the project size . If the project is local I just drop it off in their mailbox. If the project is further away I send it in the mail. If they require a contract I require a 500.00 deposit that they forfeit in the event that they choose someone else. If a customer is serious and they like your estimate they will pay the deposit. On smaller two digit projects under 50,000.00 I just call the customer and give them a price right over the phone, if they want a contract same rules apply.


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## Ragebhardt (Apr 25, 2010)

Gas here just went to $3.90
No more free estimates!
Min charge is $10 Max is $50.
Won"'t make me any money but won't cost me any to go look from now on.


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## Wallpaper man (Mar 13, 2011)

I agree and have worked in Coto de Casa among other OC areas. I use to charge for estimates but when other competitors are not charging the customer may not accept an estimate from you. You will know if they say something before you charge them. This model works well if most contractors you are bidding against do it also. Funny, sometimes the customer doesnt care if the estimate price is included in the bid, They may not want to pay it separately.


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## john elliott (Oct 23, 2005)

The answer is simple enough, if you can get away with charging then by all means do so. And good luck to you. The rest of us will continue to do it F.O.C.

I know I would get nowhere if I tried to charge for an estimate. It's hardly surprising, when they go to the dealer to look at cars they don't have to pay to find out the price.

I know that there is a lot more work in preparing an estimate for a major job, but that's our problem and not their's. It shouldn't be, but it is.


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## J L (Nov 16, 2009)

john elliott said:


> The answer is simple enough, if you can get away with charging then by all means do so. And good luck to you. The rest of us will continue to do it F.O.C.
> 
> I know I would get nowhere if I tried to charge for an estimate. It's hardly surprising, when they go to the dealer to look at cars they don't have to pay to find out the price.
> 
> I know that there is a lot more work in preparing an estimate for a major job, but that's our problem and not their's. It shouldn't be, but it is.


How about when that new car needs repair work? That's not free. Maybe a quote on tires is. But to dig in and find out what that grinding noise is - you better be ready to pay.

Oh, and you had to take your vehicle to them even if it means towing the vehicle. And evening or weekend appointments, forget it, you better make time to show up during their business hours.


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## john elliott (Oct 23, 2005)

RemodelGA said:


> How about when that new car needs repair work? That's not free. Maybe a quote on tires is. But to dig in and find out what that grinding noise is - you better be ready to pay.
> 
> Oh, and you had to take your vehicle to them even if it means towing the vehicle. And evening or weekend appointments, forget it, you better make time to show up during their business hours.



Well, there you are then, the answer is contained in your question! Stop contracting and open a car repair shop.


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## Florida11 (Dec 22, 2010)

I really want to start charging for proposals, and today I had the perfect lead that called in to try this on.

She left a vm asking twice if we do free estimates.. Not my normal call verifying if we did "free" estimates..

So when I called her back and she asked again, I said no we do not. We charge $150. Then after about 15 seconds of air, she said are you crazy? I just laughed and said well what is fair? She started laughing, but I'm thinking around $50 for painting proposal, and could be used as a credit towards any work.


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## BradingCon (Dec 17, 2010)

I have to agree with one of the posts above that stated that estimate time is an overhead account. I believe this to be true. My rationalization is that coming out and stating that you charge for estimates would make selling jobs very difficult to do. If, as another option, you look at estimates as an overhead item, you can then add that amount into your bid as overhead and profit. This is the only way that I could ever sell "charging for estimates."


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## Mike's Plumbing (Jul 19, 2010)

Because I have a new smart phone and I'm spending more time on it I'm gonna start charging $100 when people call me.

Mike


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## griz (Nov 26, 2009)

Hey, if your market will bear it, go for it.:thumbsup:

You will not get paid for bids on, Prevailing Wage jobs, commercial work or if you have been invited to bid on a job.


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## TNTRenovate (Aug 19, 2010)

If you have to charge for an estimate, you are in the wrong business. You obviously are not good enough at selling the value of your business. I will never charge for an estimate. It is part of my overhead. To me it is a sign of a hack. It is also a little unprofessional to go online and ask a bunch of contractors to tell you what to charge for your services, again, another sign that you should rethink your line of work.


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## Dan_Watson (Mar 1, 2008)

TNTSERVICES said:


> If you have to charge for an estimate, you are in the wrong business. You obviously are not good enough at selling the value of your business. I will never charge for an estimate. It is part of my overhead. To me it is a sign of a hack. It is also a little unprofessional to go online and ask a bunch of contractors to tell you what to charge for your services, again, another sign that you should rethink your line of work.


Ouch, some of the larger companies and some of the best business owners and craftsman on here charge for all of their estimates. And of course they are online so I have to take what they say as the truth but they are in no way hurting for work.


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## TNTRenovate (Aug 19, 2010)

Alwaysconfusd11 said:


> Ouch, some of the larger companies and some of the best business owners and craftsman on here charge for all of their estimates. And of course they are online so I have to take what they say as the truth but they are in no way hurting for work.


First of all read the OP. The guy is talking about recouping gas money. He is not talking about design work. He is also asking for help on what to charge for an estimate. If you have to ask me what your time is worth, you don't know your business. That was my point.

And sometimes the truth hurts. You must charge for your estimates.


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## angus242 (Oct 20, 2007)

TNTSERVICES said:


> I will never charge for an estimate. It is part of my overhead. To me it is a sign of a hack. .


How do you adjust your overhead for unsold prospects? Let's try to be realistic and say you go on 5 sales leads in January and sell 3. Now in February you go on 6 and sell 4. March, only 3 and sell 1. How do you determine what to charge for the unsold leads and who pays for them?

In 3 months you went to 14 leads and sold 8. How do you spread the cost of 6 dead lead? Do you figure it in next years budget? Do you figure by mileage or some other way?

Do you qualify via phone or email first?

I'm curious because as my leads become further away from home base, I need to be able to be reimbursed somehow. There are no guarantees but I still need to keep my head above water.

How do you handle multiple visits, say like on a kitchen remodel that has a design involved?


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## TNTRenovate (Aug 19, 2010)

angus242 said:


> How do you adjust your overhead for unsold prospects? Let's try to be realistic and say you go on 5 sales leads in January and sell 3. Now in February you go on 6 and sell 4. March, only 3 and sell 1. How do you determine what to charge for the unsold leads and who pays for them?
> 
> In 3 months you went to 14 leads and sold 8. How do you spread the cost of 6 dead lead? Do you figure it in next years budget? Do you figure by mileage or some other way?
> 
> ...


The OP stated that we should all charge for estimates. Let's all stop for a second and understand what an estimate is.

Estimate: to produce a statement of the approximate cost of

In our business an estimate should be just that, and approximate cost, not detailed contract.

The OP's reason was cost of gas, not design. Which brings me to my second point. Design is not estimation, it is exact. It is not an approximate cost, but an actual cost.

We should know our business well enough to estimate our work to a certain degree of accuracy. The OP stated that he has an "established business", which would indicate he knows his stuff.

To answer your question, it would be easier to tell you how I run my business.

Step One: Qualify the lead over the phone. (Budgeting, Planning, Ready to schedule, and cannot wait to get started)

Step Two: Onsite visit to determine the scope of work.

Step Three: Issue an ESTIMATE on the cost of the project. Explain to the client that this is to ensure that our company can complete the project within their budget. If we agree that the estimate is within range of thier budget, we move to Step Four

Step Four: Design Phase. This is billed at an hourly rate plus any mileage incurred. If the client agrees to the detailed design quote, then we get a signed contract and schedule the work.

As for the OP:

Insurance loss estimate: $ (Any insurance adjuster gets paid to complete a claims adjustment, so should we, but this is not a true estimate.)
Estimate where you have to read plans and do take offs: $ (This is not an estimate as well, last time I checked it doesn't cost gas to read plans, and as far as take offs, this is as easy as taking it to your local lumber yard and having them do it for the estimate. I have two in the area that charge $0 for this service.)
Minor home repairs $ (And here is my point, you are going to charge a HO let's say $25 to tell them it will cost $250 to complete? Nickel and dime your customers all you want, that's not how I make my money, or cover even 50 trips to give a potential customer an estimate)
Is there a standard out there for estimate charging ? (Standard? Seriously? Again, he is asking for us to tell him how much he is worth. Does any legit operation who is "established" need a bunch of strangers tell him how much his time is worth? Give me a break. He should be embarrassed to have even brought it up)

Charging $50 or even $100 to estimate a job won't keep anyone's head above water. Landing the friggin' job is the only thing that will ensure your future.


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## angus242 (Oct 20, 2007)

OK. Cool.

However, you didn't mention how you deal with leads that go unsold. That's the problem I'm concerned with. How do you recoup that lost time? And I'm not asking about simple qualifications over the phone that you know won't be a good fit. 

And not that I have issue with what anyone calls them, but I never use the word "estimate". I create proposals. I think the simple word difference changes the scope of the entire process. that's simply my opinion.


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## TNTRenovate (Aug 19, 2010)

angus242 said:


> OK. Cool.
> 
> However, you didn't mention how you deal with leads that go unsold. That's the problem I'm concerned with. How do you recoup that lost time? And I'm not asking about simple qualifications over the phone that you know won't be a good fit.
> 
> And not that I have issue with what anyone calls them, but I never use the word "estimate". I create proposals. I think the simple word difference changes the scope of the entire process. that's simply my opinion.


I guess that I don't loose that many, at least not enough that break the bank. I don't spend much time on an estimate. I go there (30 minutes, go over the project 30-60 minutes, go to the office 30 minutes, work up an estimate 30 minutes), so 2.5 hours max. Let's say at $75 an hour...so max time cost $185. Let's say 40 miles round trip...at $.51 per mile another 20 bucks...so total cost is $200 give or take.

If I loose 10 a year that's $2000 a year in estimation overhead...sorry proposal overhead. If I landed 20 jobs that year it would be an additional $100 per job. Mark up 3-5% on all bids and you more than make up the cost.

If I begin to loose more than 40% of my leads, I need to assess my business model.


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## Dan_Watson (Mar 1, 2008)

TNTSERVICES said:


> First of all read the OP. The guy is talking about recouping gas money. He is not talking about design work. He is also asking for help on what to charge for an estimate. If you have to ask me what your time is worth, you don't know your business. That was my point.
> 
> And sometimes the truth hurts. You must charge for your estimates.


I never said design work, design work should never be free. 

Charging for an estimate should cover your time and overhead just like charging to nail 2 boards together. I'm not saying I charge for all estimates, I have but a lot of my work is repeat or referral so it's not really needed since I'm usually guaranteed the job and just include that time in the estimate. 

I do agree with you about asking, and that has been covered numerous times before and does not have to be rehashed.


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## TNTRenovate (Aug 19, 2010)

Alwaysconfusd11 said:


> I never said design work, design work should never be free.
> 
> Charging for an estimate should cover your time and overhead just like charging to nail 2 boards together. I'm not saying I charge for all estimates, I have but a lot of my work is repeat or referral so it's not really needed since I'm usually guaranteed the job and just include that time in the estimate.
> 
> I do agree with you about asking, and that has been covered numerous times before and does not have to be rehashed.



But you did say:

"some of the larger companies and some of the best business owners and craftsman on here charge for all of their estimates."

Which gives the impression that you are defending the position.

You should be able to make up for the small cost to complete a simple estimate. See my above response.


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## Dan_Watson (Mar 1, 2008)

Making a truthful statement about what someone does or did does not mean I was defending their position. I was merely providing some knowledge for you.


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## angus242 (Oct 20, 2007)

TNTSERVICES said:


> If I loose 10 a year that's $2000 a year in estimation overhead...sorry proposal overhead. If I landed 20 jobs that year it would be an additional $100 per job. Mark up 3-5% on all bids and you more than make up the cost


No need to get snippy. I'm telling you what _I_ do and _my_ concerns and _asking_ what you do.

I guess I'm too afraid to lose $2000 in time per year and really have no idea how to recoup it. Going in to a new year, you don't know that you are going to have 30 potential jobs and lose 10 so you'll need to add $100 to the 20 you do get to make it up, right? I mean that's the big question. 

I don't think I'm crazy if I ask what if you only landed 14 of those 20? That means you now need to add $200+ to each landed job.

The question is how the hell do you know what to add to each contracted job to make up for future lost jobs?


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## TNTRenovate (Aug 19, 2010)

Alwaysconfusd11 said:


> Making a truthful statement about what someone does or did does not mean I was defending their position. I was merely proving some knowledge for you.


I don't think that I would classify that as knowledge, but second hand information. I will now ask you to name who are the large companies on CT that charge for all of their estimates?


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## Wallpaper man (Mar 13, 2011)

Dont know why some people want to justify a charge for estimating a job. Just do it. You will find out if the customer will pay it or even consider you for the job after your insisting on it. You should tell them up front of the charge and not after you hand them an estimate. I'm almost laughing now.


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## TNTRenovate (Aug 19, 2010)

angus242 said:


> No need to get snippy. I'm telling you what _I_ do and _my_ concerns and _asking_ what you do.
> 
> I guess I'm too afraid to lose $2000 in time per per and really have no idea how to recoup it. Going in to a new year, you don't knwo that you are going to have 30 potential jobs and lose 10 so you'll need to add $100 to the 20 you do get to make it up, right? I mean that's the big question. Yes, I thought that was explained in my post. Add 3-5% to all of your contracts to cover the up front cost. My total overhead adjustment to each contract is 12-15%. If you do just 100k in business. That gives you 3-5k for estimates and lead generation, and a total of 12-15k for office overhead. Not a bad budget. As far as managing your budget, I cannot teach anyone how to do that, it is something that you have to learn for yourself. If you are starting the year with $0 in the bank, I think that the overhead for estimates is the least of your worries.
> 
> ...


How did I get snippy?

A business loss is a business loss, I make it up on the jobs that I land. How do you pay for any advertising costs? If I purchase an ad in a local subdivision circular, I don't raise my rates on the jobs that come in from the ad to cover the cost, it is already part of my advertising budget for the year.


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## angus242 (Oct 20, 2007)

TNTSERVICES said:


> *How did I get snippy?*





TNTSERVICES said:


> If I loose 10 a year that's $2000 a year in estimation overhead...*sorry proposal overhead*.


You know. 

I asked serious questions and you volleyed around them and made it some kind of defense thing. If that's your answer(s), ok.

Sorry I actually tried to converse with you. :sad:


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## Dan_Watson (Mar 1, 2008)

Knowledge-information or data

Checkout the links given in the 4th or 5th post and you will see the previous conversations and who does what on here. 

From one of those threads, Mike Finley-

if you are always looking for the next job and have lots of free time you do free estimates


Quote:
Originally Posted by A. Spruce 
I'd rather recoup expenses for the bid AFTER the job is signed rather than before.
Just get a sheet of paper out and a calculator and it will quickly reveal itself that you're fooling yourself.

You're already charging for estimates when you are giving free estimates.

All the people who you don't end up signing up are getting the free estimates and the ones that you do sign up are paying for their estimates and for all those that didn't sign up and got your time for free.

Wouldn't it be smarter to not double or tripple load the costs on to those who you do sign up by making those who don't sign up carry their own weight instead of making your signed customers pay for everyones estimates?

Some simple math to illustrate the concept.

You go on 10 estimates at a cost of $60.00 each. ($60.00 is not a large dollar amount if you figure in gas and time to and fro, time at the estimate and time working up the numbers, and more time if you revist to present numbers or meet again. The real number is probably more like $200.00)

10 x $60.00 = $600.00

National closing average of 26%, we round up to 3 sold just to make it even easier.

3 sold, 7 unsold.

If everybody paid you $60.00 that means the 3 you sold paid $60.00 each

If you didn't charge anybody that means the 3 you sold paid $200.00 each and the 7 unsold got theirs for free, actually paid for by your sold customers.

So you're adding $200 to every job just to pay the free ride for everybody else, instead of adding $60.00 to every job, which is what you believe you are doing.


Do what works for you and works for your business. Every company is different, and needs to adapt and run accordingly.


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## angus242 (Oct 20, 2007)

I'm shutting this down.

It is no longer a conversation but a opinion-fight.

Conversations like this don't do much good for CT.

:no:


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