by David Lupberger and Dan Derkum
At a recent seminar, a contractor complained that he felt compelled to give free estimates because that’s what his competition did. The speaker suggested a role play. When the contractor, in the role of the homeowner, asked for a free estimate, the speaker, 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 speaker 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 speaker explained, a lot of guesswork and assumptions go into a free estimate. If a customer 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. Design work and time are valuable assets.
It’s About Value
Well-thought-out estimates have value. On a typical project, these services may include:
1. Meeting with the customer
2. Conducting a comprehensive needs analysis
3. Taking as-built measurements
4. Preparing conceptual drawings
5. Meeting with the customer again
6. Preparing a detailed design
7. Meeting with trade contractors and material suppliers
8. Revising the plans
9. Producing conceptual drawings
10. HOA submittal package
11. Producing a detailed estimate with makes, models, and pricing
12. Meeting with the customer again
And there are hard costs as well—mileage, copies, telephone expenses—that add up.
You’re Saving The Customer Money
A typical estimate, done correctly, requires 10-20 hours of work at a cost of $950 – $1,850. Consider for a moment if your employer required you to perform 10-20 hours of work each week for free. Would you do it? Of course not; who can afford an extra 10-20 hours per week out of their lives . . . nobody can afford that.
Think of it this way: Expertise will save the customer money. Design contractors use their relationships with trade contractors and material suppliers to find the most efficient and effective ways to do what the customer wants. The practical experience added during the design process will save the customer money and actually improves the overall design and remodeling experience.
The First Call is Free
The first visit is free—this is the contractor’s due-diligence. Questions about timing, budget, research the customer has done, and any past experience they may have had with remodeling should be asked. The conversation should be smooth on that initial visit, if it isn’t; it’s not going to get any easier after the project begins and it’s likely not a good relationship.
At the end of the first appointment, the customer should 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. The benefits of working with a design agreement and the value it brings to the process by working this way must be shared and understood.
Remember, the value of a design agreement is in the estimating, design, and success of the project itself. Most importantly, it creates a lasting, mutual, honest relationship between the customer and contractor where there are no surprises, guesswork, gimmicks, hidden up-charges or Change Orders because something the customer thought or wanted was not included. The customer knows exactly what they are paying for and how it’s going to look—beautiful . . . just the way you wanted!
About the Author
Dan A. Derkum is the owner of DAD's Construction, a leading South Orange County, California design-and-build remodeling and renovation contractor.