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Free Estimates?

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Many businesses struggle with the idea of offering free estimates. However, since businesses have different business models; the wisdom of offering free estimates versus paid estimates will differ.

I checked prices with local carpet cleaners.  One had a flat price of $129 for any three rooms. Another posted a price list of any three rooms for $119 but specified that each room must be under 250 square feet.  The same site posted pricing for halls, steps, walk-in closets, moving furniture, etc.  Both sites were designed to avoid sending someone out for an estimate. The flat price company might lose money, but an occasional loss is less than the $40 cost the business assumes with each free estimate. Plus, the estimator makes no money for the company while making the estimate. 

Large commercial properties need to be treated differently. Most carpet cleaners I know don’t make use of estimates.  They simply quote a flat price.  Their experience gives them confidence that the flat rate price will be correct. Then, when a customer calls; the carpet cleaner has an opportunity to close a sale.  If time slips by after the phone call, the deal may expire.  It is much better to set an appointment and send the cleaning crew than set an appointment and hope that an estimate brings a sale.

Other businesses need to be treated differently, too. Take construction, for example.  Construction companies spend hours preparing detailed price quotations including building materials and time involved.  It is disheartening to put in the time and realize they were not a serious competitor for the business. I believe that a construction person needs to carefully qualify the customer before investing the time it takes to prepare a detailed price quotation. Sometimes, it is necessary to screen out those who are simply kicking a tire.

I have an interest in a damage restoration business. When a prospective customer calls and water is coming through their living room ceiling from a bathroom leak, we respond without estimating the charge. I know that the customer is very likely to sign the work order, so we can work out the pricing later. Usually it involves partial billing to an insurance company. 

In other situations, we may get a call for mold damage.  We use the initial phone call to qualify the customer.  If the referral is from a real estate agent and the service request is from a prospective homebuyer where major mold showed up on an inspection report, I’ve learned to estimate the cost to be above $20,000.  If the customer wants a full estimate of the exact cost, there will be a charge for this work.  We charge because it may take 4-8 hours to prepare a complete estimate on extensive mold work.  I realize that a $20,000 mold removal expense can kill a house sale, and we end up with no work.  

Also, I look at the distance involved in providing service.  I may offer a free estimate for work within a 30-minute drive, but for a prospective customer who lives an hour or more away; I will add a trip charge for the estimate. This is partly to weed out those who are not serious. We may lose a job occasionally because we don’t offer a free estimate. However, in these circumstances we also save considerable staff time.

Competition will partly determine if a business should charge for estimates. Going back to the carpet-cleaning example, to institute a charge for estimating work would fail because nobody else charges for estimates. 

Another consideration is to determine your close rate when making the initial contact with your customer. In the restoration business, I know the close rate for fire, smoke or water damage is high because most of them come from an insurance company. Therefore, charging for estimates for these transactions doesn’t make sense. However, mold has a much lower close rate partly because the customer has no idea how extensive the problem may be. We may look at a mold job, but before spending a lot of time with a detailed estimate; we need to ensure the customer is serious and is open to spending significant money for large mold projects.

Before you determine if you’re going to offer free estimates, work through establishing a balance between providing the best possible service to your customers while protecting your business interest. The customer of a carpet cleaner gains nothing by wasting time with free estimates. They are better off to schedule the preferred service. 

Moses provided a good business example when he wrote: “If you sell land to any of your own people or buy land from them, do not take advantage of each other.” (Leviticus 25:14) We don’t want to gouge or take advantage of customers by unnecessarily charging for an estimate. At the same time, we don’t want to perform a costly estimate unless we believe there is an excellent opportunity to gain work.

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