The Myth of Free Estimates

Do you see wasting time as a challenge in your business? In our construction company in Puyallup, Washington, this has been a consistent topic of discussion and an area that we are working to lessen this drag on productivity.

• ​Time wasted cannot be recovered.
• Time wasted affects productivity.
• Time wasted affects profitability.
• Time intentionally spent increases productivity. 
• Time well spent increases profitability. 

Should Contractors Charges for Estimates?

In response to questions from contractors on whether or not we should be charging for estimates, we started a discussion on Episode 89 of The DYOJO Podcast. I made a promise that we would dive a little bit deeper into the hybrid concept which we call the Letter of Intent (LOI). As entrepreneurs we want to grow our companies. As business owners we want to lay a foundation for long term success. As contractors there is this battle against a perceived industry norm (or standard) that estimates must be free. We hope you will recognize what many skilled tradesmen who have become business owners are practicing, that you DO NOT have to uphold the MYTH that free estimates are just the of "the cost of doing business". ​

You DO NOT have to uphold the MYTH that free estimates are just the of 'the cost of doing business'

The Cost of Doing Business

There is a battle between bidding work, producing work, getting paid for work completed, and all the things in between that affect our ability to do more. Your time and expenses for inspecting and estimating a project are real. If you do not recoup those costs in some form, you are feeding the MYTH that estimates are FREE. As a small business owner you wear multiple hats. You only have so many productive hours in a given day.

Consider this entrepreneurial dichotomy: 

• When you are inspecting and writing estimates, you are NOT producing or collecting on work
• When you are producing or collecting on work, you are NOT writing estimates or acquiring new work 

I shared many of my thoughts on how we identified wasting time as an issue in our construction business on the Restoration Rundown podcast from Ironclad Restoration Marketing. The Letter of Intent (LOI) is something we have discussed internally for some time and decided to launch at the beginning of this year. To my surprise, during my first call introducing this process to a customer they responded, "That makes sense, send it over and we will sign it." 

The host, Ben Ricciardi has also authored an excellent book, The No Bulls**t Guide To Internet Marketing For Restoration Contractors. That title tells you exactly what's in the book.

The Contractor's Letter of Intent

There's a lot of back and forth on socials whether contractors should be charging for estimates. Before we can argue this point, we need to define a few terms. 

• Estimate. An estimate is also known as an informed guesstimate; a rough (non-binding) verbal quote based upon the parameters provided. 
• Proposal or bid. A declaration of the scope and estimated cost (binding) based upon a greater level of detail, typically following a site inspection by the bidder.

If you provide something verbal, an educated guess of an estimate, based upon rough details provided by the client, then a FREE (non-binding) estimate may be appropriate. "Based on what you have described to me, your rough cost would be in the range of $______ and $______. If it sounds like we understand your scope and the numbers are in your budget range, would you like to discuss the next steps for having an estimator perform a more detailed inspection followed by a written proposal?

There is no such thing as a free lunch, someone is paying. STOP perpetuating the MYTH of the free estimate. In the free estimate scenario, you are paying all of the costs to bid the work. AT A MINIMUM, please screen your clients so that you know what you are getting into. We discussed the Client Intake Process on Episode 86 of The DYOJO Podcast. If you have a clear, thorough, and consistent process for client intake, you will generate credibility with the client and set your team up for success. You will know whether the juice (Free Estimate) is worth the squeeze (Your actual costs of inspecting, writing, and producing a free estimate).