Question about price per sqr. foot

[jmichalski]

Originally Posted by rbunzel

I would avoid publishing a price list. Several reasons - its allows people to shop without ever talking to you. 2) Realtors will keep the price list long after you have changed it, creating uncomfortable situations for you when a client books with an old price. 3) Customers will lock in on a price even when it clearly doesn't fit your pricing model 4) Realtors will avoid using you for a period of time after you have raised your prices.

I clearly describe my pricing model for realtors and encourage them to call me before they quote a customer. My partner or myself answer the phone 20 hours a day so we can provide a quote at anytime. I can alter my prices to fit the free market model without telegraphing to everyone that I am doing it. For example I recently had a client who was "high maintenance" I was alerted by both realtors that this was going to be a tough inspection and will need more time to deal with client issues. So I bump my price by $50.00 to deal with the client issues. Yes the client was hi-maintenance and we did use the extra time. With a published price list, I wouldn't have been able to do that and would have had to eat the time. Same goes for HUD auction homes or repos. Regardless of size there will be lots to write up. Now I bump my price because it will take more time...... 'nuff said.

//Rick

I look at it from exactly the opposite perspective.

I have my prices posted intentionally so that people call me to schedule immediately. When I am on the internet looking for a service or tradesperson, I want to see rates and other information. If they are not there - I am off of your site and on to another one that does provide such info.

A "Call me for a quote" means (to me) "call me so I can give you the song and dance sales pitch" which I don't want - this is the entire reason I am surfing the web (instant info) and not flipping through the phone book.

My prices are set aggressively to be attractive so that people can comarision shop.

I intend to close internet shoppers. I market to price shoppers.

I am not concerned about the impact of raising prices, as people expect tht they will change from year to year or more frequently (plus, I don't mind giving them a discount the first time - a break for them and the client that makes me look good in the end). I have yet to employ RR's gradual rise theory, but it also sounds like it will work without incident.

This strategy is not for everyone, as no strategy is. If you charge a high price relative to your competition, this will not work for you. If your website is basic or needs work, it will not work for you. There are many reasons...all I know is it works for me.

[Mark S. Elliott]

I had this dilemma and decided that I really wanted to charge a fair price for me as much as for the client. It’s a win-win then. I thought there where a number of things that would impact my price for a particular house;

Floor area
Crawl space
Pool
Septic
Miles driven
Time driving

To have a price ready at hand I needed a quick and easy method to calculate the price. To do this I created a spreadsheet. It’s called “Miles from Celina” Email me at mark.elliott@yellowhatinspections.com if you want a copy.

If you want to adapt it you will need to build a list of time and distance for each city you work in and then replace my time and distance constants. You will also have to input your chare for a Pool, Crawl space and septic. The SS will then give you a price in less than a second.

PS, I have a minimum charge of $250.

[jmichalski]

Maybe another trick to the appeal of my pricing on line is that it is uncomplicated. I don't add on for crawls, detached garages, etc. Anciallary inspections are listed separately and can be added as needed.

Regarding travel chrages - If I was calling a plumber and he wanted to upcharge me because he lives 20 minutes further from my home than his competitor - guess who I am calling? The competitor.

I know I am more agressive than most in pricing strategy - but I want to be as busy as possible, and the strategy has proven effective for me (our milage may vary).

[John Evans]

It is very important to establish a base minimum fee. Remember, the actual inspection time is only about half of the total time dedicated to each inspection. If you charge something like 150.00 - 200.00, there is truly not enough profit to make it worth while. Don't cut yourself short, add all of the expenses involved in this business. Our base fee is 289.00 for a town home located within 25 miles.

John Evans

[Russel Ray]

Originally Posted by melliott1

I had this dilemma and decided that I really wanted to charge a fair price for me as much as for the client. It’s a win-win then. I thought there where a number of things that would impact my price for a particular house;

Floor area
Crawl space
Pool
Septic
Miles driven
Time driving

To have a price ready at hand I needed a quick and easy method to calculate the price. To do this I created a spreadsheet. It’s called “Miles from Celina” Email me at mark.elliott@yellowhatinspections.com if you want a copy.

If you want to adapt it you will need to build a list of time and distance for each city you work in and then replace my time and distance constants. You will also have to input your chare for a Pool, Crawl space and septic. The SS will then give you a price in less than a second.

PS, I have a minimum charge of $250.

Oh, I was so with you until I got to that last line. Darn.

[Russel Ray]

Originally Posted by jmichalski

Regarding travel chrages - If I was calling a plumber and he wanted to upcharge me because he lives 20 minutes further from my home than his competitor - guess who I am calling? The competitor.

That is an area where it is very useful to know exactly what your competitors are doing. For example, my competitors won't travel to the boondocks. I do. Therefore, I can charge virtually what I want to go to the boondocks. And I do. I've never had anyone turn me down because if they question the price, I simply tell them, "Well, if I stay close to home, I can do three inspections at an average price of $325, or $975. By going to the boondocks, I'm not here to do those three inspections, so I really should charge you $975. However, I enjoy going to the boondocks, so I'm only charging you $775." I book them every time because they are afraid that if they hang up and call back, I'll charge them $975.

When I shop my major competition each quarter, yeah, I check to see if they will go to the boondocks. They never do.

[Russel Ray]

Originally Posted by jmichalski

Maybe another trick to the appeal of my pricing on line is that it is uncomplicated.

Mine is very complicated, which is why I went to the "starts at" marketing technique:

FLYBY - Starts at $29
DRIVEBY - Starts at $39
WALK - Starts at $49
Etc. for the other seven inspection types.

Please call for a firm quote for your zip code.

I have an Excel spreadsheet that is predicated on the lowest inspection price, so all I have to do is change one price in the spreadsheet and all the prices for everything else changes. I only add travel charges for the boondocks, so I only have to compute travel charges about once a week.

Ultimately, I intend to put my prices back on my web site with a database so that one can enter the square feet, the city or zip code, and the type of inspection and get a price quote that is good for 14 days. It will be similar to the search function at About Homes.

[Russel Ray]

Originally Posted by jevans

It is very important to establish a base minimum fee. Remember, the actual inspection time is only about half of the total time dedicated to each inspection. If you charge something like 150.00 - 200.00, there is truly not enough profit to make it worth while. Don't cut yourself short, add all of the expenses involved in this business.

For the most part, that is true. However, one can very easily take on volume with little additional work and make more money. For example, I would love to do 10 WALK inspections a day since they average $149 and have no report associated with them and typically are done for the same Client. $1,490 for about four hours work with no written report is far, far better (in my mind), than doing a 15,000-SF mansion for $1,490 using seven inspectors (taking 21 person hours) and taking another 2-3 hours writing the report.

One only needs to think outside the box, find niche markets, do what no one else is doing. Once you find your niche, especially if it is a unique niche, one can virtually do whatever one wants, and make a significant amount of money doing it.

[Bruce A. King]

Can you drive to 10 different houses in CA traffic, do your "walk" AND educate your client at each of the 10 houses all in 4 hours?

(I bet RR says "yes" LOL

[Russel Ray]

Originally Posted by bking

Can you drive to 10 different houses in CA traffic, do your "walk" AND educate your client at each of the 10 houses all in 4 hours?

(I bet RR says "yes" LOL

Yes.

Why?

Because my WALK inspections are for investors. They typically are looking at specific neighborhoods, for whatever reason, so it's not uncommon, especially in a buyer's market to find 10-30 houses for sale in, say, a 20-square block area. So once one gets to the neighborhood, there is no more traffic involved. So, yes, absolutely, it's possible. In fact, it normally takes 15-30 minutes to do a WALK inspection on a 1500-2000-SF house, which is the size that is most popular with investors. So, let's say that we average 20 minutes per house, times 10 houses, equals 200 minutes, or 3 hours 20 minutes. Yes, very possible. In fact, I've already done it. My WALK inspections are booming and I have more time to spend with Ms Margarita and Dr Cuervo.

There's very little education in the WALK inspections because that's not what an investor is looking for. He doesn't care about the fact that it is a stucco house built on a slab with a gable roof, and all the other descriptive carp that we're supposed to put in our written reports.

[jmichalski]

I am just beginning to roll out different levels of inspections. As I do, I will see if I need to adjust my pricing strategy and policy of listing them.

Most likely, I will create a method for people to do comparision pricing on my own site (comparing different levels of inspections and prices to each other) so that they will still ahve all teh info they desire, but will be comparision shopping me....against me!

They just might never click off to compare the price around since they will have all different manner of choices and prices all on one site..... It certainly will be interesting to track.

I also am able to cover a pretty huge area (blessed with good geography) and I will travel with no charge just about anywhere. This is because I have yet to hit the business ceiling where I am turning away work or triple booked 7 days a week.

There is always at least one slow day that can accomodate a 2.5 hour drive each way - it kind of relaxes me, I make a little bit of a day of it, and I get paid for it.

On top of it all, even if my competition will drive there, few will do it without a travel fee - another bonus marketing point for me.

[Russel Ray]

Somehow I edited this post instead of quoting it and thereby screwed it all up. I have no idea what was in it prior to the following:

Quite frankly, I'm just amazed that anyone would market to people (and their Realtors) who are buying $10 million properties the same as they would the person buying his first condo home at $250,000 (San Diego prices). They are totally different markets and want totally different services. Granted, they all want a home inspection, but it's what you do above and beyond the actual home inspection that gets them on your side for life.

Sorry about that. Darn margaritas:

[jmichalski]

Originally Posted by rray

Quite frankly, I'm just amazed that anyone would market to people (and their Realtors) who are buying $10 million properties the same as they would the person buying his first condo home at $250,000 (San Diego prices). They are totally different markets and want totally different services. Granted, they all want a home inspection, but it's what you do above and beyond the actual home inspection that gets them on your side for life.

Well said, and excellent points.

My approach to the differnet clientele was going to be through a different company with a different target market (historic, estates, obnoxiously high end). Now I think I will also diversify my primary company (almost to compete with myself) and add several levels of inspections in one location as well.

This is going to take the whole weekend to draw up!

[Dale Duffy]

Originally Posted by jmichalski

Well said, and excellent points.

My approach to the differnet clientele was going to be through a different company with a different target market (historic, estates, obnoxiously high end). Now I think I will also diversify my primary company (almost to compete with myself) and add several levels of inspections in one location as well.

This is going to take the whole weekend to draw up!

Think I'll do the same Joe, change Phoenix Home Inspectors Inc. to various types of home inspections, and leave the other companies as they are....good ideas....

This board is full of good ideas tonight....

[Russel Ray]

Originally Posted by jmichalski

This is going to take the whole weekend to draw up!

Well, if it only takes you the "whole weekend," send me your business plan because it has taken me 5½ years.

I guess NACHI members are rewarded by me sharing my successes and failures, and the excesses of Ms Margarita and Dr Cuervo.