The True Cost of Estimates


(Photo by Highways Agency)

I recently planned to have some work done on my car and thought it was time to find a new auto mechanic, so I did my homework. I talked to friends, checked on various social media websites for recommendations, etc. I called the top-rated one and explained what I specifically wanted done and asked for an estimate. The helpful salesperson told me the cost, explained what the cost included, and even compared themselves to the competition. Satisfied, I scheduled the service. After arriving, I was warmly welcomed and presented with a written estimate that was significantly higher (almost twice the cost that was stated over the phone). I was shocked. What would you have done?

I negotiated the price down to the estimate, but promised myself I wouldn’t be a returning client. Why? They lost my trust from the beginning. They gave a number of excuses (we were busy, we guessed at the charges, estimates aren’t promises, etc.) but the bottom line was how I felt. And they weren’t taking care of that feeling at all.

If a prospective client asks you for an estimate, what should you do? If you have a schedule of charges, then it’s easy to say “a basic haircut cost $40, and includes a wash, rinse, and blow dry”. If the charges vary based on specific details, then get the information you need to make an intelligent estimate. And if necessary, put some “wiggle room” into the charges (“Our basic service runs $1500, but it’s hard to give a firm number until we sit down and go over all the details.”). Whatever number you quote will serve as a psychological “anchor” to your prospect. That number will stick in their head as the true cost, unless you’re able to clearly articulate the possible additional charges.

Don’t be tempted to offer artificially low estimates to get people to your business. You might win the sale (pressure them when they’ve invested the time to come to you) but lose the long-term business (and risk the wrath of them bad-mouthing you to their network). Better to under-promise and over-deliver.

One thought on “The True Cost of Estimates

  1. Hi Jay,

    I’m asked the estimate question at almost every new business presentation. After 30 years, I’ve learned not to give one. I say something like, “Instead of me just guessing, let me get back to my office, put some thinking into it, and deliver a real Budget Estimate in writing by tomorrow.” This gives me more time to council the client and think things our more thoroughly.

    By the way, my Budget Estimates have several lines of 9 pt. type at the bottom that explain that this is merely a budget figure, and increases or additions will all be issued in writing prior to beginning work. I also require the Budget Estimate to be signed (along with any addendums) because the person who pays me is not always the person who agreed to the charges.

    You make a good point in your article…if you’re not feeling good after the estimate/actual charges issue, they’ve lost you at the very first point of contact. Who wants to do business that way?

    Bruce Koren

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