Free Estimates vs Paid Proposals - Builders and Contractors Watch This

[@xavytex]

Great advice. I heard the same process from Nick at NS builder (he has a channel). I'm going to try that but I'm anticipating lots of people won't want to pay for the 2-5 hours it takes me to give a quote and design (I do build-ins and bathrooms). Hell, most people don't even have a budget when they ask me to come ! Cheers

[@maxa3221]

The magic word you said in here that made my brain light up is 'retainer'. This is exactly what my lawyer did to land my serious for a legal case and now that I have a painting business I can definitely see where on more complicated quotes you need to filter serious customers out/in. You're just trying to be respected for a process that could potentially go nowhere. Which is even more critical for Contractors that do 25+ different trades/consultants. Im not sure how retainers would necessarily apply to $5K to $15K jobs like im currently doing but i'm excited to think about it. For example I just did Island work on a per day rate sight unseen (yes I know) but worked for this company for a year, definitely trying to figure out that I need to incorporate a paid quote on far distances since only I can determine how long my work will take 'me'. Thanks for the video

[@akbmunsell]

Great explanation. Thanks

[@NorthernGuyRob]

Customer here. This is really useful to know, I guess estimates are still really useful for small jobs, without a lack of factors

[@tomtillman]

Bidding on jobs that you don't get is part of your cost of being in business. If your customer doesn't even have a plan, then they need a consultant, or architect. In such a case, fees are justified. But if I give you a plan, and ask how much to frame it, I would not pay for that. Whether to charge for a "proposal" depends on the client's situation, which varies a lot. Also, being a good carpenter/contractor is only part of the game. You need to be a good salesman too.

[@macontractors8072]

That’s awesome!

[@BobbyJett1]

Every proposal is an estimate until bid acceptance and contract awarded. Then let the game of extras begin. The whole process is adversarial in nature.

[@miguelespinoza8602]

Thanks dude great information

[@larrytinnin3357]

How much per hour?

[@scotthartzell9157]

@wkp_contruction This makes total sense to me. How much per hour is each our own, but can you please share about how many hours you are charging for in your retainer? Thank you in advance.

[@apscoradiales]

The quality of the bid or tender should not be based on whether the job is a "free estimate" or "paid proposal", but it should be contingent on how good of a set of tender/construction documents you have. Any job should have a clear set of documents, and if you, as a homeowner, want to build something, my strong suggestion is that you either have an architect or an engineer or a construction manager on hand to protect your ass. Paid proposals can be expensive, and are not a true measure of whether the contractor is straight and honest or is a fly-by-night scammer. To ensure you're getting fair, and proper prices is, like I said, to have a proper set of documents, and pre-qualify the bidders. Pre-qualifying the bidders can take form in many different ways - past experience, references, track records, bonding, licencing, word-of-mouth, suggestions from friends or relatives, meeting with potential bidders to discuss the job, and so on. As an architect of nearly 40 years of experience, and having worked on a $6,000 laundry room renovation (in my own house) to a $750 million transportation hub centre to almost everything in between, I have never dealt with a contractor who wanted to get paid for giving us or our client a price for tendering on the job. It simply is not done. If you, as a builder, want to function that way, well, it's a free country and go right ahead. Our clients would never pay up-front for a bid. We have, on occasion, discussed or picked-the-brain of contractors about a job without them getting paid, and them knowing fully well that there will be others who will bid on the job. It is how life is in construction sometimes, and we all accept it.

[@stickersb1236]

I charge $55 if the client is insistent that we come to the site to give an "estimate" which in reality is a consultation. We primarily do tree removal and land clearing so its pretty easy to get on google earth/street view to judge a trees size, location, obstructions, and ease of access so I can give a "free estimate" over the phone. Our $55 consultation fee is refundable if they decide to buy from us and that money is taken off of their final invoice. Its not free for me to burn the gas in my truck to drive to you and I also value my time.

[@williambardin6487]

Makes a lot of sense. I'm not building a tract home. I'm looking for a "high performance" builder in NJ right now. I have no reservations about paying for a detailed proposal. My issue is finding THAT builder in the first place. The architect is helpful, they have several contractors they would recommend, but that's only a small group. How do you filter out all the wannabe's?

[@JavierOropeza08]

Sounds like it would be difficult to find this in any market? Just a thought, but maybe you can reach out to a high performance product that you were thinking about or know about and maybe ask what builders they have worked with in your area? I am not sure if they would give you that information, but can't hurt to ask? Just out of curiosity, how much would you think a detailed proposal would cost? Did you consider how much you think that would be? I would imagine it might be based on the square footage of the work area?

[@apscoradiales]

Pre-qualify the bidders. Ask the architect to help you do that process.

[@chuckchalfant]

I'd be interested in hearing how the "Proposal/proposal acceptance/award contract/build/change order/ final inspection process is broken? If you think that process is broken, don't ever get into Federal Government construction projects. Fixed cost plus sounds great, but the weight of the bureaucracy can break your back! I've always found the best arrangement was to have a Third Party Project Manager (usually the architect of record) to hold everyone's feet to the fire, to include the customer, keeping change orders to a minimum. I think most GC's probably do not like that idea. I'd be interested to hear your thoughts on outside PM's (meaning PM's outside your company)?

[@apscoradiales]

Construction Managers (rather than Project Managers, as you suggest), do not hire a General Contractor. They act as a General Contractor themselves (with some legal and insurance differences), and hire a bunch of Sub-contractors to execute the job. Process works well. Governments like this better lately then a general tender. Construction Managers will often craft their own Front End to Tender documents rather than have the architect or other consultants do that.

[@jerryh2954]

We stopped giving our time away with free estimates and never looked back. Leave that practice to the suckers.

[@johnmorgan6549]

I have worked in the construction industry for 47 years (how retired) and this falls into the category of "nice work if you can get it". This is a repackaging of negotiated work, but requires customer to committed to unknown cost before knowing anything. Good Luck

[@EricFeldtJrProTexRemodeling]

We don't do Free Estimates. Who the hell else goes to work for Free? No One!

[@crabkilla]

Can you give me an estimate of what an estimate costs?

[@sergeybebenin]

They both have their place. For example, as a client, I have no clue how much my siding + windows replacement would cost if I also want to add couple of new details. I need a free _estimate_ to understand if/what I can afford to even start looking into this. This should be a ball park price and I don't want to pay for this. Proposal on the other hand is something I will need to actually plan my real finances around (borrow/save real money). Yes, I'm willing to pay for proposal because it will end up part of my project anyway.

[@95thousandroses]

No offense, but there really isn't a good reason a person should mark time out of their day to come by your house and do anything for "free".

[@sergeybebenin]

@@95thousandroses Huh? Even the guy in this video explained that he does. Everyone with good business practice does. I don't have any obligation to act on his estimate so in that case, yes, it ends up free for me.

[@JavierOropeza08]

Couldn't you maybe to home depot and look at windows or contact some manufacturers based on a quick google of the most popular manufacturers for your area? I think the problem that usually occurs with this kind of free estimate is that the client/home owner does not usually consider all the items that might drive the price up, and when the price goes up, the client is like but wtf, you said this price now its this much? Then everybody is mad because the owner thinks they are getting ripped of and the builder thinks the client is trying to get away with not paying for necessary work. On a side note, how are you planning for the proposal? How will you know how much to pay for that? thanks!

[@sergeybebenin]

@@JavierOropeza08 I can't just "Google" prices. The overall cost depends on the combination of: - material (that part is somewhat Google-able) - quality I demand (I will ask what techniques they use, etc.) - physical location of my house (ease of work) - custom work (I'd like to add some windows, ask if ZipR makes sense, maybe add at least one exit door overhang, etc. As you can see, you can't estimate all of this for $$ allocation purpose. Think of an estimate as an interview and proposal as a hiring contract. You don't pay someone for an interview but you usually pay a signing bonus if a person is hired. That's the way I see it and I think it's fair. If a contractor doesn't agree, well, I don't want to work with such contractor. Lastly, I'm not contractor so I can't answer the last Q. But what I know is that a contract is when the project is broken down into details and you derive a very accurate cost. There could be contingency clauses but it's understandable

[@JavierOropeza08]

@@sergeybebenin what about when you take your car to a mechanic and they charge you a diagnosis fee? Should they not charge you for the time it took to look under the hood, and based on their knowledge and experience? I think that if the estimate is all done through email/phone calls and are brief w/ the understanding that its a ballpark estimate, I do not expect there to be a charge. But if the contractor has to come out and meet you at your house or property, and walk the site, then I think some sort of fee could/would be justified, the same way mechanics usually are. I think personally, I would pay maybe $75+ for someone to come out and then provide me a better estimate? I guess the estimate would technically be free, you would be paying for the in home visit? I can see how it would get expensive if you talk to multiple GCs and they all charged you a fee, but ideally you would only need to pay the fee 1 time, to the first contractor. Hopefully you learn a lot from the estimate and walk through with the first contractor that you can do all the other "interviews" through the phone only and avoid other contractors coming out to see the house. I do however appreciate the free estimates, and I am not saying I want to be charged if they do not want to charge me lol, but I also want to be fair and this video made it seem that a lot of times people take advantage of a contractors estimates. Good luck with your house!

[@ColeSpolaric]

On the homeowner side of this, estimates are flawed because the lower estimate may not be getting you what you want.

[@JavierOropeza08]

I think to the uninformed/uneducated homeowner, you are right. If your only metric for selecting a contractor is price, then be prepared for the shit show that will likely occur

[@bwsct]

Your ideal clients obviously have huge wallets

[@juliancate7089]

And that's a problem for you because......?

[@itsmejuan]

these are the best clients lol

[@borys444]

If everyone is doing free estimates then y would anyone want to pay for a proposal?

[@BobbyJett1]

You must not have listened to the video....

[@borys444]

@@BobbyJett1 if I missed something then y don’t u educate me and answer my question then? Thanks

[@BobbyJett1]

​@@borys444 I can explain it to you, but I can understand it for you...

[@borys444]

@@BobbyJett1 ok well explain.

[@sergeybebenin]

Because it breaks down the project in details so you can go to the bank and know exactly how much to borrow.

[@Jay0x00]

This sounds like your business model is more of a consultant.