The Design Builder's Blog

Tips For Contractors On Ball Park Pricing and Charging For Estimates

Any contractor who has been in business for any length of time has probably had to deal with Ball Park pricing and charging for estimates.  Home owners always seem to want one but not the other.  Rather than risk letting a Ball Park price make them look bad, savvy contractors can use the request for one to help cause the other to happen.  If interested in how to do this, read on.

Let’s start with Ball Park Pricing

How many times in your career has a homeowners asked you for a “Ball Park” price for their project.   And, how many times did your Ball Park price end up being nowhere close to the actual price of the project? 

I find the whole idea of Ball Park pricing comical. I’m not saying it doesn’t have value in some selling scenarios.  I am saying however that when contractors offer a Ball Park price more times than not they strike out rather than hit a home run.

So, when I was selling remodeling and a prospect asked me for a ball park number, I would respond by asking them which ball park they preferred; Fenway Park or Yankee Stadium. That usually stopped them right there in their tracks and helped them think about what they just asked for.  And, by asking that question, I was able to get them into a much more meaningful conversation about their project.  Let’s face it; a "ball park number" really doesn't have much value unless there are some specifications to help give it any relevance.

Try asking them about which Ball Park they are looking for.  Feel free to substitute the parks you use. I think you will find doing so to be a great conversation starter. 

Then there’s the whole idea about charging for estimates

As contractors we know estimates are not free.  Somehow the cost of creating an estimate must be recouped by the contractor. 

Some contractors may say they don’t charge for estimating.  If that is true they are working for free and the cost of estimating is not included in the price quoted to the prospect.  I don’t know about you, but in my opinion if you do estimates for free you are undervaluing your worth and might also be putting your professionalism in doubt.  If you are not charging for estimates, and you also are not accumulating enough money to someday retire, working for free might be a good part of why.  And, contractors who do so are making things challenging for those who do charge by helping consumers think they should get estimates for free. 

On the other hand many contractors who tell their prospects they do not charge for estimates are actually not charging for the estimate in advance, they recoup the cost of estimating through their markup; but only if they sell the job.  

It’s OK if they don't want to pay, but why get offended? 

So why do prospects get offended when you tell them you charge for estimates?  Did they expect you to work for free?   Do they work for free at their jobs?  I doubt it. 

When I was selling remodeling and homeowners asked if I would do free estimates I would say yes and give them an estimate right then and there.  I would say something like “I estimate the bathroom project will cost somewhere between $15 and 25, 000”.   Then I would just wait.   When they asked why such a big range I would simply ask them why they thought I had to give such a big range.  It usually led to meaningful conversations about the fact that an estimate is really just a guess and may not have any relevance to the true cost of what they would actually want to buy.  And, as a result, having this conversation helped them discover the need for plans and or specification so I could give them a fixed price in place of the “estimate”. 

After all, that’s what most remodeling consumers really want; a fixed price for what they actually want. 

One option you can try if the Home Owner can’t understand why you charge for estimates

Next time a homeowner wants a free estimate, or is upset about charging for one, why not suggest bartering?

"If I spend the time to collect all the info about your project, seek pricing from my vendors, meet with my subs to get accurate pricing for their work, and then assemble an accurate cost and proposal; how about we do a trade? Maybe while I'm doing that stuff you could either babysit my kids or cut my lawn? What to do think Mr. Home Owner, would that be a fair trade?"

A point of clarification which should already be obvious

If you choose to go down the “Which Ball Park” or “Let’s barter” path make sure you do it in a respectful manner and your purpose for using this analogy is appreciated by your prospect. 

How you say it can make the difference between being the contractor of choice and being shown the door!

Need help with estimating? 

Checkout this Estimating Workshop for Contractors

All Plans and Specifications Will Be For The Exclusive Use Of …

Do you give your plans and specifications away to prospects for free, or do you only leave plans and specifications with paying customers? 

Remember, people who want stuff for free hang around with other people who want stuff for free.  How you decide to answer this question will have a long term effect on your business and future referrals. 

If you choose to not leave your proposal with prospects unless they commit to your company, this policy should be discussed with your prospects during the initial sales call.  By doing so it will not become a surprise to them when you come back to present your proposal. 

You are presenting, not emailing proposals, right?

Sample text

Here is some sample language you can consider using inside the remodeling proposals you create for prospects.  This information is for your reference only.  Be sure you have it reviewed by your own legal council before using it.

This proposal and any related plans and specifications shall be for the exclusive use of; and will remain the property of “Construction Company” until a Construction Contract agreement for the proposed work is reached between both parties.  The acceptance of this agreement will require the owners’ signature(s) and payment in full of the specified deposit.   If this proposal is not accepted at the time of presentation, owner(s) are welcome to view all plans and specifications at the contractor’s office at a mutually agreeable time.

This language is best used at the beginning of your proposal

Include your policy in beginning of your proposal so you can remind your prospect about your policy very early during the proposal presentation meeting.  If they have a problem with your policy you can discuss their concerns and both of you can decide whether it makes sense to continue and present/discuss the rest of the proposal. 

By not leaving your proposal behind you are protecting your business as well as your prospect

The information you include in your proposal comes from your many years of experience and education.  For this you deserve to be compensated.   Also, because you and your team have expereince working together, I would suggest your proposal probably contains a level of detail adequate for you and your team to build from.  But, your proposal may not have adequate detail for others to build from.  If you allow other contractors to work from your proposal they and the home owner may be making assumptions about what is or should be included to do the job correctly and to building code or safety requirements.  By allowing such things to happen you may be putting other contractors, the home owners and or the success of the project at risk. 

How much risk are you willing to accept to sell a deal?

I also suggest you consider the possible liability you take on by creating specifications and or project plans and leaving them with a prospect that does not do business with you. By doing so you may have put yourself into a position where the prospect or another contractor actually works from them.  If they have challenges when building the project and decide those challenges were caused by your plans and or specs, they may have legal rights to sue you.  Regardless of whether you feel you are innocent or guilty, you will need to cover your own legal expenses if you get to court and most likely will not be able to re-coup your legal costs even if you are found innocent.  If you are found guilty you may even be required to pay the legal expenses incurred by the person suing you.

If you decide to take this risk, I highly recommend you obtain Errors and Omissions Insurance Coverage or Professional Design Liability Coverage.

Some big picture thoughts for remodelers to chew on before they decide:

• I suggest you are in the business of selling remodeling, not designs.  Can you earn a living selling designs?
• Avoid being used as an unpaid consultant.  How does that feel when it happens?
• Don’t let your proposals, specifications and plans facilitate the ability for some guy named “Bubba” to get the job rather than you.
• Not every lead you get should or will be YOUR customer.
• If you work for the wrong customers, they will be referring you to people just like them!

Not All Remodeling Leads Are Created Equal

All contractors want leads.  Without leads there wouldn’t be any customers to do business with.  Some contractors are happy just to get leads and they give little thought to the quality of the lead.  Other contractors want specific leads and create criteria they will use for qualifying the value of those leads.  If as a contractor you want to sell more projects and don’t want to waste valuable leads you might want to consider where your prospects are in their buying process before you try to close the sale.  Attempting to close the sale too early can kill the value of a lead all together; at least for your business.

A name and a phone number do not represent a lead

It’s important to consider how you and your business will define a lead.   This subject came up recently at a Remodeler’s event I participated at earlier this year at the Marvin Windows and Doors Training Center up in Warroad MN.  From the discussion that followed we all came to the conclusion that most contractors who do no marketing at all consider a lead to be anyone who calls their businesses looking to get work done.  On the other hand those remodelers who were doing proactive marketing were adamant that a qualified lead was what they were after. To these remodelers, and I agree 100%, a qualified lead was a  lead that qualifies to do business with a company based on that company’s pre-established  target customer and product or service offering. 

Qualifying leads

There are many ways to qualify the value of a lead and whether or not your business wants to work with a certain prospect.  In a previous blog post I shared a list of 25 questions contractors can use for prequalifying prospects.   As the market picks up and leads increase you won’t want to be wasting time chasing poor quality leads.  Use those questions, and any others that make sense for you, to help focus your efforts on the right leads. 

Consider the importance of timing

One thing many contractors neglect to consider is where their prospect is in their buying process.    Here are three ways to think about this:

1. Some prospects are just getting started thinking about what to do.   They aren’t ready to commit to any specific product or choose a contractor to work with yet.
2. Some prospects have already started their research.  They may be clear about what they want to accomplish and the things they need to consider, but may not yet have chosen the right products for them or even know where to start looking to find them.   They too may not yet be ready to chose a contractor and make a commitment to buy.
3. On the other hand some prospects have done their research, done their due diligence picking out products and are ready to interview contractors for the purpose of moving forward and getting their project under contract.

Knowing where your prospect is in their buying cycle can often make the difference between closing the sale and alienating the prospect.

Close the sale or nurture the lead?

Consider that if you try to close a prospect that is still in steps one or two above they will not likely buy anything from you, at least at that time.   How could they?   They still don’t have enough info to make a confident decision.   If you try to close them you might just alienate them.   Depending on your approach, if you make them feel bad because they wouldn’t make a decision and or that they wouldn't buy from you, they may never buy from you.  But, on the other hand, if you know they are not ready to buy, rather than attempt to close them see if you can help them move their process along so they can do the due diligence required to confidently make a decision and sign a contract.   Helping them through this process is what is often referred to as lead nurturing.

Practice Catch and Release

According to GE Capital Research consumers spend 38-115 days researching before making a major purchase. If your qualified prospects are not yet ready to buy, respect their process and consider your approach with them.   Give them the time they need when they need it.  By this I mean give them time to do their research. And, at the same time consider offering them some guidance to help move them along and to show that you can be a trusted adviser for them.   When they are ready to decide on products and need help with that part of their process again be ready with help and guidance, but don’t try to close them yet.   Remember, if they told you they were still trying to decide what products to use how could they make a buying commitment?  Trying to close them may seem disrespectful to them.  Instead offer them guidance and let them know you would love to work with them when they are ready to choose their contractor.  The idea here is that if you practice catch and release, and your prospects can swim off unharmed, they will likely remain in your pond and may decide to jump on your hook when they are ready to bite!

Finding a Good Web Site Designer for Your Contractor Web Site

As a contractor you need to think of your website as a tool.  No contractor would buy a tool before verifying it would do the job intended.  And, if that tool didn’t perform as sold I’m sure you would want to return it.  You can typically return a tool if it’s not working, but you can't return a web site - ever!  

When I was ready to have a web site for my contractor coaching and contractor training business I didn’t just want a tool that listed what I could do.  I could have easily done that with a basic static web site for far less money.  Instead, I wanted a tool that would help my target contractor coaching prospects find me and figure out whether or not they wanted to work with me or not.  I was looking for a way to differentiate myself and my approach from other contractor coaches and trainers.  What I was looking for was an advanced marketing tool, not just a web site.  

Seek referrals before you choose a website designer

In my quest for a web site company to work with I was specifically referred to the one I chose by another business owner I know who had similar goals for his business.  This web site design company owner did what I thought was a great job interviewing me to uncover my purposes before she designed, priced and built my site.  Now, because of her assistance, I can help targeted prospects find me and prevent suspects from wasting my time and resources!  And, if contractors seeking help with their businesses aren’t yet ready to buy, I can nurture them along with more information about me and my business until they are. 

Don’t waste time or money on a bad web site or a bad web site designer

You and your business may not be looking for the same prospects as my business, but I bet you have the same desire to have a web site that will help you find and prequalify the right prospects for your business.  Done right, after the original investment of working with a web site designer, your contractor website can be a very effective and low cost way to attract the right clients for your business.  But if you choose the wrong designer or choose one based on price alone, you will have wasted a lot of time and money.  Even worse, your target customers won’t be able to find you on search engines and you will remain a commodity selling yourself and your service on price.

I hope you found this article helpful.  You might also like my list of red flags to watch out for when selecting your web site designer. 

If you want help planning the purpose and function of your web site, or help with selecting a web site designer, send me an email me now.  I’d be happy to discuss what you want and or need so you can do your first website right the first time.

More articles about creating a contractor website:

Seven Ways Contractors Can Prequalify a Good Web Site Designer

Hate Contractor Lead Generation Services? Why Not Get Some Chickens!

On Your Contractor Web Site, Qualify, Don’t Disqualify Your Prospects

If You Don’t Or Won’t Offer Generation Y Prospects What They Want They Will Go Away

11 Common Traits of People Who Buy Remodeling On Price

Consumers who buy remodeling on price typically don’t care about anything else but price; until they become customers.  Then after your remodeling or construction company has them as customers they seem to always want more than they agreed to pay for. 

There are two main types of prospects who buy remodeling on price. 

• The first is those who are driven to pay as little as possible.   These people typically apply this logic with everything they buy.   They are also much more likely to lie to you, your employees and your subcontractors if it suits their purposes for saving money and or getting more than they paid for.
• The second is those who, lacking insight, simply don’t know what else to consider when deciding between contractors so they base their decisions on the bottom line.  These people may actually be willing to pay more when selecting one contractor over another, but the contractor must be a true sales person to help them discover other more important things to consider.  

It also takes a true sales person to distinguish between those who buy on price on purpose and those who buy on price due to a lack of insight.  Most contractors are terrible salespeople, so most contractors have to sell on price.

For those who have been selling on price

My purpose of writing this blog is to provide contractors with some motivation to embrace sales training so they are not destined to sell on price forever.   Check out my list below of the common traits of those who buy your services on price.  If these things are happening to you it’s your own fault.  When you think of yourself as a contractor first and a sales person second, you doom yourself to a career that will probably pay you less than per hour than your employees earn.  If that is already happening you have three choices:

1. Decide to do something about it and get some professional sales training and coaching.
2. Decide to do nothing and recognize that you and your business are commodities
3. Or, avoid thinking about it and stop reading this blog post before you feel any worse about your situation

People who buy solely base on price have these common traits

I encourage you to use the comments area to add any others you feel should be on the list.

1. They see remodeling as a commodity where every contractor and proposal are the same, not a service where one company does things differently than another.
2. They always seek to get more than they paid for.
3. They don’t like to give big deposits or commencement payments; they expect the contractor to finance all or most of the job until the final payment.
4. They lied to you and think it’s just fine to do so.  This often leaves them wary and concerned that you will lie to them as well, creating a need for them to always be suspicious when interacting with you and your team.
5. These people won’t like discussing change orders at all, won’t pay for change orders at acceptance and or will want to negotiate their cost at final payment.
6. These people try to get free stuff out of you and your team after you start their job.  If you give in on this they will want more free stuff.  They are also likely to forget about the free stuff you already gave them when you want to charge them for any extras or change orders.
7. They will typically dispute your payment schedule, make scheduled progress payments late and delay your final payment as long as they can.
8. They will only buy from you again if you are the cheapest of the contractors they speak with.
9. They get closer to their own retirement at your expense and limit your ability to retire.
10. They will often find some way to blackmail you into reducing the final price.

These people hang out with other people just like them!

Here's one last thing to think about if you sell to people who buy on price; they hang around with other people just like them.   If they refer you they will probably be referring you to other prospects who also buy on price.   When they do so, based on their own experiences working with you, they will often coach the referral on how to lie to you and get stuff for free.   They will also often identify what your business’ weaknesses are so the referral can watch for them and use them to blackmail you into some type of money related concession before they are done with you.

Checklist of Consideration for Contractors Offering Snow Removal Services.

When winter snows and ice dams hit many contractors see offering snow and ice dam removal as an opportunity to make money.   If you’re considering snow removal as an opportunity for your business thinking ahead about how and where you offer it, as well as how you will perform the work, can help protect your business from inherent risks.  Thinking ahead about your approach can even help you drum up additional work after the snow has disappeared.

Offering snow removal services makes sense for many contractors 

After all, if work is slow during winter months, snow removal can bring in extra revenue.   Also, many projects come to a halt when the weather makes working outside impractical or makes going in and out of a building while working on interior renovations dangerous and messy.   If you price it correctly, offering snow removal and ice dam removal can help keep employees working and help contribute gross profit to cover business overhead.

How the snow removal checklist list came about

Several years ago I helped one of my remodeler coaching clients plan out how to offer and perform snow removal services.   He called me because he realized there were a lot of things he should consider before just sending his guys out with there with shovels and axes.  Below is a list of considerations from my coaching session notes created during my discussions with him.   By sharing my notes my hope is that you will find them helpful, you will price the work for profit, you and your employees will be safer while performing the work, you can use the opportunity to create new customers and you will generate future work from those that hire you.

Checklist of Snow Removal Services Considerations for Contractors:

• Suggested he consider the work is labor intensive, he will not be earning his typical gross profit on subs or materials, be sure to price hourly rates accordingly.
• Agreed on $300 first hour with two men, $80/hr per additional man hour.
• 4 men doing it currently.  Full employees with Workers Compensation (WC) coverage. 
• Discussed properly equipping his employees to avoid risk and health problems. Confirmed he has fall protection equipment needed to meet OSHA requirements and employees know how to use it.  Should try to do as much of the work as they can from the ground.
• Confirmed that he knows which WC classification workers will be in while doing the work and what rate he will be charged on all related payroll.
• Discussed a variety of ways to do the work to limit residual damages.
• Discussed setting realistic expectation with clients before doing the work. Agreed that only using a verbal agreement about services would not be acceptable.
• Help home owners understand nature of the work, let them know that damages will happen and that he cannot guarantee preventing leaks or any possible damages inside or outside.
• Suggested he have an agreement; created and or reviewed by legal counsel.
• Suggested he disclaim in the agreement any water damage prevention and or remediation responsibilities.
• Look at the work as a good way to meet new clients.  Because there might be more demand than he can service, be selective about who he will work for, make sure they fit within his target customer/location niche.
• Suggested he make follow up calls to verify home owners are all set and happy, ask if they should come back if it keeps snowing.
• Collect contact info including e-mail addresses so he can re-market for future work.
• If he uses any subs make sure they are properly insured and follow OSHA requirements.  Make sure subs know not to attempt to solicit or accept any work from his customers.
• Keep emergency contact info on site and or in each vehicle.
• Suggest he ask about future work, both snow related and remodeling.
• Could create a checklist of things to ask or tell customers related to the work and future work; what his company does.  Said he has already created a simple sheet listing other work they do.
• Suggested he should be prepared regarding how to differentiate his business from other businesses offering the work. Discussed one way is to offer all clients an insurance certificate that lists the home owner as an additional insured, sent direct to the client from his insurance agent before work starts.  Verify his agent is prepared and capable to do so.
• Suggested considering doing a YouTube video commercial about the service and put it on his website ASAP.
• Discourage use of Red Bull, maybe even coffee. Suggested hot chocolate and donuts.
• Suggested refrigerator magnets would be a good leave behind.  Also consider 5-5-10 door hanger package we had discussed on a previous call about jobsite marketing.
• Asked him what his top three takeaways from our discussion were:

1. Caution regarding liabilities, set expectations with clients in writing.
2. Realizes the marketing opportunity, concentrate on working for his target customer.
3. Keep an eye on the big picture to avoid liabilities and not miss an opportunity by being blinded by a just getting the work done mentality.

25 Sample Questions Contractors Can Use For Prequalifying Prospects

Smart remodelers and contractors know that time is money.   Wasting time on the wrong prospects eats up the time they need and should be spending with the right prospects for their businesses.   By using methods to prequalify leads contractors can gain back a lot of time currently being wasted on people who were either the wrong client types and or were never going to buy from them to begin with.

Incorporate prequalifying questions into your lead sheet

Below is a list of suggested questions contractors can use to help determine whether someone who inquires about doing business with them meets the business’ pre-established definition of a targeted prospect.   To help contractors make best use of this list I’ll be discussing how and when to use these questions, on the phone and or in person, at an upcoming sales workshop.   At the workshop I’ll also explain how to customize a lead sheet using questions that help prequalify a prospect and captures information the sales person can use if a sales call is scheduled.  With the right lead sheet as a tool, anyone at the office can be trained to use the lead sheet to begin the prequalification process even before a salesperson becomes involved.

What you say and how you say it

If you plan to use any of the sample questions below, be sure to put them in your voice and or use your own vernacular.   Just be sure your prospects will understand any of the words or terms you use without the need for previous construction or remodeling experience.

Questions for prequalifying prospects:

1. Is there anything you’d like me to know before we begin; about you, your family, your home, your expectations…?
2. Why do you want this done?
3. Have you remodeled before?  What was that like?
4. What are you looking for in a contractor?
5. How long have you lived in your home?
6. How long do you plan to stay in your home?
7. Do you know what year your home was built?
8. How long have you been thinking of remodeling?
9. How long have you been considering this project?
10. Are you trying to stay within an investment amount?
11. What is your ideal start date?
12. What is your ideal completion date?
13. Have you done any research on this project?
14. Where are you in your research process?
15. Are you looking to hire a carpenter, or a professional remodeling company?
16. Are you speaking with any other contractors?
17. Is there a reason you haven’t already decided to work with one of the contractors you have already spoken with? 
18. Is there something you were hoping I would be able to do differently?
19. Do you have any plans or a design in mind?
20. Are you interested in financing or paying cash?
21. How will you decide which contractor you will partner with for your project?
22. How will you measure whether or if your project has been successful?
23. Will there be anyone else involved in making decisions about this project or which contractor you will choose to work with?
24. When Mrs. Jones referred you to us/me, was there something she said that stood out and motivated you to contact us/me?
25. Are you looking for an estimate or a fixed price for this project?

Bonus question:

What do you think we will need to do or discuss if you want me to give you a fixed price for your project?

Remember, contractors make money selling the job, not building it!

Want to sell more jobs and make moe money?  Need sales training or coaching to help you and or your team reach your sales goals?   Contact Shawn today to discuss how he can help.