Do you provide free quotes?
If you are in the residential market and still providing free quotes, you should stop. It’s called free consulting, and you won’t be successful giving away your time. Doctors don’t. If you have had the unfortunate need to visit a specialist medical consultant to discuss a problem and consider a potential course of treatment, they will probably charge you between $500 and $1,000 an hour for the privilege of their advice. It is unlikely your hourly rate is that high, but you are still providing a similar advisory service to your potential customer.
In providing a quote to a potential customer, you may be doing everything from putting together some initial numbers to providing some preliminary design work and saving the customer significant money through your experience.
How to start charging for quotes.
The question is how do you start charging for something you once gave away for free? At the simplest level it’s a two-step process:
- first convince yourself, then
- convince your potential client.
The first problem is internal. You must become convinced that you are providing a valuable service to your prospect during the quoting and design development phase. You have spent years to develop the skills and the team to deliver a successful project. At some point in working with a potential new customer, you need to start charging for your time to acknowledge that value you bring to the table.
Develop a proper sales process
Just suddenly flicking a switch and charging for quotes probably won’t work. You need to develop a more structured and considered process to first build trust with a prospect and then create a series of hurdles for them to climb over and move them to the next step. The first visit to a prospect’s home will likely be free. That’s when you do your due diligence by asking the questions needed to see if this is a job you want and if they are the type of client you can work with. Questions about timing, budget, past research, and any experience the homeowner may have had with other building projects.
Towards the end of the first appointment, you can lay out the next steps, which should include a paid, low-cost estimate stage and have them sign an initial agreement accordingly. The agreement lays out a payment schedule for the delivery of preliminary plans and the cost estimates that go with them. The key thing to stress to the homeowner is the potential savings you can provide to them by taking a more careful and detailed approach at the start of their journey, rather than rushing to full working drawings with an architect and having a design that far exceeds their budget. I am sure you all have stories of people who have had architects design a project that is impossible to build for their budget and have their dreams dashed. Use a story or two to illustrate the folly of following the old traditional “finalise the plans and get 3 quotes” process.
Getting a signed initial agreement creates some powerful results. When the homeowner pays you some money (however small), they are now your customer and effectively off the market to your competitors. With such an agreement, free consulting stops after the first sales call. It also helps to move the client on to paying for the full project pricing proposal more naturally. Putting together the full proposal may take you 50 hours or more and require you to coordinate pricing elements from a dozen or more suppliers and trade partners. Most builders who provide this for free either resent not being paid for it or do a rush job….or both.
There are several other moving parts to developing a comprehensive sales process that does not include providing free quotes. Do you refund the quote cost when the build contract is signed? How do you increase trust with clients at the start? How do you qualify out the dreamers and time wasters? I don’t have space to cover off everything in this article, but if you want more information on building or refining your sales process, email me at andy@tradescoach.co.nz or fill out the enquiry form HERE and we can start a conversation.
Whatever you choose to do in your business, I hope that it works for you. Just remember that it’s not wrong to charge for a service provided. Figuring out the best way to deliver a project and pricing the work is a big part of your job. Whether you’re charging for that time, experience, and knowledge upfront, or you’re hiding it in the price of the work, it’s still being paid for. If you’re actually not charging for it, then you’re giving away your time. And time is money.