When you're preparing to take on a job, giving the customer your estimate is one of the most important moments in the process. Your customer trusts that your estimate is based on good information, and expects that the final price will be very similar to your initial estimate.
Of course, estimates are so-called for a reason. You can't predict the future of a project, and there could be change orders, revisions and incidents that increase the price of a job. However, as a contractor, it's important that you work to prevent these instances from happening.
Here are a few key details to keep in mind when you provide estimates to your clients:
Two of the biggest culprits of inaccurate estimates are bad guesses about labor and material costs. By planning ahead, you can get a good idea of how much time a project will take and the cost of supplies to accomplish it.
Poorly estimated labor costs you time and profit. Each day extra you're on a job site eats into your revenue, and it delays the beginning of your next project as well, Professional Remodeler pointed out. Once you begin one project late, it has the potential to impact each scheduled project going forward.
To improve your labor estimates, don't guess about anything you've never done before, Construction Programs & Results, Inc. recommended. If you agree to take on something new, seek out guidance from a professional with experience in that area.
Additionally, you might consider bringing in the workers who'll be active in the project, Remodeler noted. Schedule a time when they can spend a few hours in your customer's home so they can identify any potential issues they may come across. Make note of any problematic areas and discuss how you would handle a situation related to them.
Material cost estimates that are off-base also negatively impact your profitability. It's imperative that you have accurate pricing for each item you'll need to complete your job.
One common method remodelers use to estimate materials pricing is to look back at their purchase history and see what they paid in the past. This is a simple and quick estimation method, and it sometimes works. However, if you're looking at materials costs from a year ago or more, it's not out of the question that your vendor has raised prices. Always double-check your prices and update your records to reflect commonly purchased items.
Accurate estimates work well for many of your materials, but after a certain threshold, you may want to get a quote from your vendor just to be certain. For items that cost several hundred dollars or more, reach out to your vendor and make sure you know how much money you'll need to make the purchase. Don't forget to check how long that quote is good for and pass that information along to your customer. You wouldn't want to provide an incorrect estimate just because a quote expired.
You and your contractors are only human. Mistakes happen, supplies get misplaced and parts are used incorrectly. If you don't plan for human error, though, you'll pay for it - literally.
To make room in your estimate for accidents, take a look at your past jobs. Compare how much you estimated for materials, labor, subcontractors and other costs, with how much you actually spent in those categories. Use the average percentage difference to guide your allocation for mistakes.
Though some customers may be well prepared for the cost of home improvement projects, you shouldn't count on every client being ready to see their final estimate. Some will be shocked at the cost of a home renovation, and you'll get pushback. Get ready for this by preparing an explanation for your estimate.
If your customers are financially savvy, they'll likely shop around before choosing to go with your company. Along the way, they may come across a company that'll give them an impossibly low quote, which sets unrealistic expectations. To address price objections, highlight the value of your team and the materials you chose.
Ultimately, clients want to work with a remodeling company they can trust with the integrity of their homes. To build that trust, it's important to be transparent as well as helpful. That may mean suggesting new ideas based on what the customer wants.
If someone calls you to request new windows, find out what the problem really is. If they're trying to improve a drafty living room, the problem may be in the insulation, not the windows. Find out the problem, determine the right solution and work with them to accomplish their goals.
Even when your estimates are on point and your client fully understands the value of working with you, there will be times when the cost of a project will take them aback. Providing financing programs is a great way to make the home improvement process easier on your clients.
When you work with Aqua Finance, you'll receive funds directly deposited into your account and may be able to approve more jobs than with other financing companies. Additionally, you could get 100 percent financing for some customers. To learn more about the benefits of partnering with Aqua Finance, contact us today.