Sometimes a potential client expects you to work for free. They want you to provide drawings, generate a detailed estimate, and help them with selections, and then they’ll consider using your services if you’re the lowest bid.
That’s not a smart route to take unless you have a lot of money in the bank and time on your hands. Your time has value, and you should be paid for the services you provide.
A reader shared with me a note he sent to a homeowner after a sales call where he had to deal with this issue, and I wanted to share it with you.
It’s not clear if we can be of service to you.
When we spoke today I outlined the design/specification proposal. You did not appear to be interested.
The design/specification proposal is always the best path forward to realistic job costing, and it becomes more important when a project incorporates unusual features as yours does. The process of bidding something like this becomes a matter of designing the installation, costing with the specialty material men (for the fixed glass) – securing a quotation, and then assembling these and the other costs. I have already sketched up the glass treatment and faxed it to my supplier. They haven’t had time to respond yet. This amounts to a service.
Moving forward from here requires the balance of design/specification. Designing the installation is actual work. It is a service. Hence I have generated a proposal for service that would both concretely define the project, and at the same time clearly present the project for the building department. These services are part of the array we offer.
I hope this clarifies what appears to be a misunderstanding about gratis services. Our initial meeting was of course at no cost to you. These further services are available for a fee.
Thanks for reaching out to us. Let me know if we can be of service to you.”
Many clients understand that your time is valuable, but others don’t. Sometimes, they resort to emotional manipulation to get what they want, expressing outrage or scorn for daring to protect your business and your time. They want you to cave in and give them what they want, and that’s easy to do; no one wants to be scorned. It’s important to recognize it when it happens and keep hold of your emotions. If they treat you like that, you should reconsider whether you want to do business with them anyway.
I would suspect that each one of our readers has had this happen on sales calls, probably more than once.
Our contractor handled this correctly. It’s possible he should have been a little more direct and told this potential client in the first thirty minutes of the first call that he doesn’t do free drawings, free estimates, or anything else that would be considered a service without a design agreement or Letter of Intent. We cover that in detail in our book, Profitable Sales; A Contractor’s Guide. On the other hand, maybe he did and the client still expected free services.
Protect your time and protect your business. No one else will.
On a related note, another contractor posted an interesting response to our article from two weeks ago, “Lowering Another Contractor’s Overhead“. The article discussed an investor trying to figure out how to get his contractor to cut his overhead and his profit expectations so that the investor could maintain his profit margins on the “Flips” they were doing.
Tim points out that real estate investment seminars encourage investors to seek out relationships with contractors like this to keep costs down. That’s even more disturbing.
Folks, watch out for this ploy (or maybe scam is a better word). Zig Ziglar used to use the phrase, “Them that has, gets!” What he meant was that those with money make more money. In this case, they make it off the backs of those who are working for them.
Their philosophy is: “Let the other guy take the risk, let the other guy pay the price.”
Here’s my best advice on this subject. Don’t go into any project with an investor if they start saying any variation of “I want you to cut your overhead”, or “I want you to cut your margins” or “How can we get the price of the work down?”. That’s a surefire way for you to lose your assets. Don’t listen to any promise of future jobs “if you’ll cut your price on this one”. As my dad used to say, every job stands on its own two feet.
Someone needs to explain to me how volume is a cost benefit in rehabbing homes. Your job costs won’t be reduced. The only possible place you could reduce your overhead is in your marketing costs, and you’d be foolish to stop marketing because you’re getting jobs from an investor who wants you at the lowest possible price.
The investors might know their own numbers real well, but they don’t know the numbers of flipping, remodeling, building new or any variation thereof. To maintain the profit they hoped to make, they lean on everyone else to reduce their profit or even work at a loss. Tell me, how is that fair to the guys doing the work?
Are all investors doing this? Of course not. But be on guard for those who take this approach. It is a no-win for you. Remember, you aren’t in business to be competitive or to help an investor who underestimated what a project would cost. You’re in business to provide a service and make a profit doing it.