Free Estimates: When a Contractor Should Offer Them (And When to Charge a Fee)
Estimates are usually free for small, simple jobs like painting a bathroom. A contractor will charge for an estimate for complicated, big projects that involve detailed designs and multiple plan revisions, such as building an addition to your home. A labor-intensive estimate may cost $150 up to $1000, according to Angie’s List.
Confused about what an estimate is? This article answers your questions and includes free construction estimate calculators to help you estimate your job. FreshBooks also has an estimating feature with professional estimate templates.
In this article, we will cover:
What Does a Free Quote Mean?
A free quote is when a company prepares a customized quote for a potential client free of charge. Tradespeople such as roofers and painters often provide free quotes. Local companies use this tactic to compete with larger companies, as it’s an effective strategy to get new clients.
That said, there are disadvantages to preparing free quotes. A free quote can actually cost a business more than $200, according to Compare the Tradie. Here are some top considerations:
A free quote can be time consuming to prepare. Depending on how complex the job is, a free quote can take hours to draw up. A big job likely needs to take many different factors into consideration.
- For example, a contractor needs to price out renovating a kitchen but he also needs take into account the time and materials needed to fix poorly installed kitchen cabinets (work done by another contractor).
Many quotes need to be in writing but for smaller jobs, a contractor can simply provide a verbal quote.
If a tradesperson needs to visit a site to provide a free quote, the cost of gas has to be considered. Often, a contractor will try to tie a visit in when they are already in the area. But, this isn’t always possible. Plus, quotes for big projects may require more than one trip.
Are Estimates Free?
Estimates tend to be free for small jobs that are fairly straightforward.
Estimates are usually free for:
- Getting a price to fix something
- Small jobs like washing windows or painting a room
- Installation work (of fixtures, for example)
- Consultations that involve talking to a client over the phone or visiting the site to do a more precise evaluation
- Companies that have a policy of providing free estimates
Estimates are usually not free for:
- Getting a diagnosis for why something isn’t working
- Consultations for large, complicated jobs that need lots of design work, revisions and several plans (like remodelling a bathroom)
- Companies that have a policy of charging for estimates
A business may also charge an estimate fee if the client doesn’t hire them or a trip charge to cover the cost of gas to do site visits, according to Angie’s List. A business should always tell a client upfront if they charge for estimates or not, even if it’s just a trip charge.
A contractor may also charge for inspections but not estimates and should explain upfront what they do or don’t charge for each service.
People also ask:
Should I Charge for Estimates?
As a very general rule of thumb, you should charge for estimates for complicated projects like a home addition or kitchen remodel.
But in reality, whether a small business charges for an estimate is based on the size of the job, the general practice of its industry and personal philosophy, according to Fine Homebuilding.
Charge for estimates for large projects with multiple stakeholders like subcontractors and an architect or designer. It will take more time to coordinate with them as you prepare your estimate. Also, charge for estimates where pricing out materials will take time.
Estimates for large projects can take hours (even days) to do well. Some contractors believe that they should be charging for their time. Other believe they need to spend money to make money.
Whether you should charge for an estimate can depend on whether your competitors are doing the same or not. Practices can also vary based on region.
Some industries consider free estimates part of overhead costs and just another factor in doing business. Perhaps there are too many competitors in the business to consider charging for an estimate. Or it’s considered unprofessional to ask clients to pay for estimates—that companies with good reputations don’t need to ask clients to pay for them to convince them to hire them.
- For example, residential architects, engineers or design/build contractors in the Midwest typically don’t charge for estimates, according to Fine Homebuilding.
Business philosophy comes into play. Some companies might believe that a free estimate is a “guess” but a paid estimate is an accurate estimation of costs. Others want to be compensated for any work they do.
Other contractors believe charging for estimates eliminates clients who aren’t serious about hiring them.
A small business could offer a free consultation via phone but paid in-person consultations. The trick is asking the right questions to seperate the merely curious from the ready-to-hire.
Ask prospective clients on the phone:
- What is your budget?
- Have you remodelled before? What was it like?
- What do you want in a contractor?
- What other companies have you called?
- What would you want us to do differently than other companies?
- How did you find out about our company?
- Did anyone refer you?
- How will you decide if a project’s successful?
- Do you want an estimate or a fixed price?
Some potential clients may use an estimate to negotiate a lower project cost with another company they’ve already chosen, according to Construction Dive. Asking the right questions (or even charging for a construction estimate) will help you figure out if that’s the case.
If a client asks why you charge an estimate fee and your competitors don’t, this is a great opportunity to explain the difference between you and other companies and the value your company brings to the table.
How Much Should I Charge for Estimates?
Estimates usually cost $150 to $1000, according to Angie’s List. This includes the consultation and a design that takes into account custom work, several plans and multiple revisions. Markup & Profit puts this range at $50 to $750. The price depends on location and your line of work.
Do some research on Angie’s List or by checking out the websites of your competitors. Do they offer free estimates but paid proposals? Or do they charge for estimates? How much? This will give you a good place to start when pricing your own estimates.
You can also choose to deduct the estimate cost from the project fee, if you like, according to Remodelers Advantage.
To prevent customers pushing back against estimates fees, have an estimates policy in place from the beginning. You could charge for proposals but not estimates, as the true definition of an estimate is a rough number. A proposal involves site visits, taking measurements and getting prices for materials, according to Construction Dive.
A contractor can also try charging a lower estimate fee in the beginning, especially if they’re nervous that potential customers won’t pay. They can then raise their estimate fee down the road.