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The Real Cost of a “Free Estimate”

We are all on this earth to profit – not necessarily in a fiscal sense; perhaps in a spiritual, or mental, or physical one – but the truth is we are all here because we want to ‘gain’ something from life, and ‘profit‘ has many definitions.  One of these is ‘advantage, benefit, gain’; another is ‘to be of service or benefit’.  As a customer service business, our profit is always measured in more than the dollar sign or the profit and loss statement.  Our ‘success’ is measured in satisfied customers, positive feedback, and repeat customers, along with each and every compliment we manage to garner along the way.

One of the challenges that we face as a small business is the out of pocket expense we handle in order to be a service oriented company.  Inc.com advises considering these three costs when calculating how to price business services: material, labor, and overhead.  While it sounds simple enough, an object like an electrical outlet, for example, has a nominal material cost – but the electrician needs a container to store it in, and equipment to test a circuit and figure out when a it needs a new outlet, and the time we have to pay him to go to a supply house and pick it up.  When service is done for a customer, all these costs for that small service must be taken into account; when we pay our electricians we do so not just for their time, but also their experience, the hiring and training process, their expertise, their education – and while we rarely bill our customers for it, we certainly pay our electricians for their time spent driving to and from appointments.

Our overhead covers not just the van our electricians drive, the tires it turns, or the gas it burns – it also covers insurance policies of an almost astronomical size, personalized business cards & uniforms, and of course keeping the lights on and the phones answered in the office.  All of these tiny factors are calculated into that ‘simple formula’ small businesses calculate their cost of business by, along with tons of other things that aren’t so easily listed as being a ‘basic’ cost.  According to an article by Wasp Buzz, there are ‘hidden’ costs to running a business that most owners forget to take into account and they suggest business owners sit on 20% of their possible ‘revenue’ to pay for things like:

  • Industry association fees
  • Licenses & permits
  • Legal services
  • Credit card processing fees (front and back end)
  • Employee benefits & fringe perks
  • Company cell phones – and in this day & age, tablets, laptops, and other data systems
  • Office space
  • Utilities
  • Purchasing office equipment
  • Repairs & maintenance
  • Time

‘The Cost of Doing Business’ vs. The ‘Real’ Costs of Small Business

Likewise, we have a different standard we hold ourselves to when we are looking at our growth; a tangible, measurable sign of improvement and change.  According to marketmetrics.com, businesses only have a 5-20% chance to convert a new prospect into a guaranteed customer – yet we consistently perform better and stronger than statistics dictate, reinforcing  the stellar opinion of our service.  An American Express survey revealed that 7 out of 10 customers are willing to pay more for a company that delivers on not just a good product but even more importantly on a good service experience – this means that providing a better work environment, filled with happy employees who want to perform well, will actually generate happier customers who are willing to pay for the privilege of a great experience.

The truth of the matter is that there really is no such thing as a free lunch – or a ‘free’ estimate.  It is a gift we give to consumers, an opportunity where we bite the bullet and absorb all the costs of doing business so that we have a chance to show just how great a service we can offer.  That means we take a licensed, trained professional and put them in a company vehicle with a company phone, GPS, and tablet – we send them to a customers home and give them time to learn what a customers project goals or needs are, do research into fixtures, circuits, systems, etc., and put together a personal, comprehensive financial picture of their electrical project costs.  Not only that, but we prepare a formal, typewritten estimate at our office and electronically submit that as well to our customers.   A lot of companies offer free estimates as a courtesy to their customers – we do it because we believe once you give us the opportunity to have an honest discussion about your goals and needs, then we can all be transparent.  It costs us everything, but our customers get to reap all the benefits.

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At this point in time you’re probably wondering what we get out of it since nothing really is free in this world.  It is true that we ask for something in return, from our potential and repeat customers: we get paid by their respect, and our return is the priority they give to us.  By allotting us time on their schedule, and giving us their undivided attention, our investment is repaid.  What we want is to feel of value, since we are being called in as an ‘expert’ in the field of the work we do, to be treated with the professional deference we give someone else.  That is why our estimates are free for you – and how we get paid for giving them away.

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Swartz Electric – Your Colorado Springs Electrician performs electrical work throughout Colorado Springs, Monument, Black Forest, Fountain, Falcon, Woodland Park, and everywhere in between. We are the electricians in Colorado Springs to solve your electrical problems and meet your electrical requirements.

Call, e-mail, visit our website, or stop by our office today, and allow Swartz Electric to serve YOU.

This is an original article written by Mai Bjorklund for Swartz Electric. This article may not be copied whole or in part without the express permission of Swartz Electric, LLC.

© Copyright 2015. All rights reserved

The Real Cost of a “Free Estimate” was last modified: March 19th, 2015 by Mai

One Response to The Real Cost of a “Free Estimate”

  • Interesting article, nothing is free anymore so you have to know that why you do ask for a consultation that after the consolation they will expect you to buy in and get whatever you asked them to look at fixed! It is just an interesting concept that something could be free but just isn’t.

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